Euro extends further the breakout of 1.0900 – Crypto News – Crypto News
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Euro extends further the breakout of 1.0900 – Crypto News

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  • Euro reverses the initial pessimism and prints decent gains vs. To install the US Dollar.
  • Stocks in Europe trade mostly with decent gains.
  • EUR/USD regains composure and climbs past 1.0900.
  • Flash inflation figures in Germany surprised to the upside.
  • Chief Powell suggested that more jobs need to be done regarding inflation.

The Euro (EUR) regains composure and motivates EUR/USD to break above the 1.0900 hurdle on the back of further improvement in the appetite for the risk complex on Thursday. Indeed, spot picks up extra traction and quickly leaves behind earlier weekly lows in the 1.0880 region, where the 55-day SMA also sits.

Indeed, the pair makes a U-turn on the back of the loss of momentum in the risk-off sentiment, at the time when the greenback gives away initial gains and forces the USD Index (DXY) to breach the key support at 103.00 the figures.

The rebound in the risk complex comes despite central bank chiefs expressing hawkish sentiments at the ECB Forum in Portugal on Wednesday, highlighting that current policy measures are still not adequately restrictive. Despite this, the market appears to be at ease with the belief that the Federal Reserve (Fed) will implement two additional interest rate hikes, potentially back-to-back, signaling the nearing conclusion of the tightening cycle.

Likewise, although the European Central Bank (ECB) holds a hawkish stance and plans to raise rates in July, and potentially once more thereafter, concerns arise due to the economic decline and credit data, which restrict expectations regarding the extent and duration of the ECB’s policy rate increases.

The potential future actions of the Fed and the ECB in normalizing their monetary policies remain a topic of ongoing debate. This discussion takes place against the backdrop of increasing speculation about an economic slowdown on both sides of the Atlantic.

It will be a busy day regarding data releases. So far, advanced inflation figures in Spain expect the CPI to rise 1.9% in June, while the Economic Sentiment and the final print of the Consumer Confidence in the broader euro area eased to 95.3 and held steady at -16.1, respectively, in June. Finally, preliminary inflation figures in Germany see the CPI rising 6.4% in June vs. the same month of 2022.

In the US, the final prints of the Q1 Growth Rate will be in the limelight seconded by the usual Initial Jobless Claims, Pending Home Sales and the speech by Atlanta fed Raphael Bostic (2024 voter, hawk).

Daily digest market movers: Euro surpasses the 1.0900 barrier with conviction

  • The Euro shrugs off initial USD strength and advances to daily tops.
  • Germany’s flash CPI for the month of June surpasses consensus.
  • The European Council meets in Brussels.
  • Fed’s Powell said there is still work to do regarding US inflation.
  • The US Dollar loses ground as investors digest Wednesday’s event at the ECB Forum.
  • ECB’s Mario Centeno (dove) suggested a pause should be close.
  • Atlanta Fed’s Raphael Bostic advocated for some pause to assess the impact of policy so far.

Technical Analysis: Euro meets initial contention around the 55-day SMA

EUR/USD remains under pressure and puts the provisional 55-day SMA at 1.0880 to the test on Thursday. A loss of this level exposes a deeper pullback to the June low at 1.0844 (June 23) ahead of the provisional 100-day SMA at 1.0815. South from here emerges the May low of 1.0635 (May 31) prior to the March low of 1.0516 (March 15) and the 2023 low of 1.0481 (January 6).

If bulls regain the upper hand, the next hurdle is then expected at the June peak of 1.1012 (June 22) prior to the 2023 high of 1.1095 (April 26), which is closely followed by the round level of 1.1100. North from here emerges the weekly top of 1.1184 (March 31, 2022), which is supported by the 200-week SMA at 1.1181, just before another round at 1.1200.

The constructive view of EUR/USD appears unchanged as long as the pair trades above the crucial 200-day SMA, today at 1.0583.

German economy FAQs

What is the effect of the German Economy on the Euro?

The German economy has a significant impact on the Euro due to its status as the largest economy within the Eurozone. Germany’s economic performance, its GDP, employment, and inflation, can greatly influence the overall stability and confidence in the Euro. As Germany’s economy strengthens, it can bolster the Euro’s value, while the opposite is true if it weakens. Overall, the German economy plays a crucial role in shaping the Euro’s strength and perception in global markets.

What is the political role of Germany within the Eurozone?

Germany is the largest economy in the Eurozone and therefore an influential actor in the region. During the Eurozone sovereign debt crisis in 2009–12, Germany was pivotal in setting up various stability funds to bail out debtor countries. It took a leadership role in the implementation of the ‘Fiscal Compact’ following the crisis – a set of more stringent rules to manage member states’ finances and punish ‘debt sinners’. Germany spearheaded a culture of ‘Financial Stability’ and the German economic model has been widely used as a blueprint for economic growth by fellow Eurozone members.

What are German Bunds?

Bunds are bonds issued by the German government. Like all bonds they pay holders a regular interest payment, or coupon, followed by the full value of the loan, or principal, at maturity. Because Germany has the largest economy in the Eurozone, Bunds are used as a benchmark for other European government bonds. Long-term Bunds are viewed as a solid, risk-free investment as they are backed by the full faith and credit of the German nation. For this reason they are treated as a safe-haven by investors – gaining in value in times of crisis, whilst falling during periods of prosperity.

What are German Bund Yields?

German Bund Yields measure the annual return an investor can expect from holding German government bonds, or Bunds. Like other bonds, Bunds pay holders interest at regular intervals, called the ‘coupon’, followed by the full value of the bond at maturity. Whilst the coupon is fixed, the Yield varies as it takes into account changes in the bond’s price, and it is therefore considered a more accurate reflection of return. A decline in the bund’s price raises the coupon as a percentage of the loan, resulting in a higher yield and vice versa for a rise. This explains why Bund Yields move inversely to prices.

What is the Bundesbank?

The Bundesbank is the central bank of Germany. It plays a key role in implementing monetary policy within Germany, and central banks in the region more broadly. Its goal is price stability, or keeping inflation low and predictable. It is responsible for ensuring the smooth operation of payment systems in Germany and participates in the supervision of financial institutions. The Bundesbank has a reputation for being conservative, prioritizing the fight against inflation over economic growth. It has been influential in the setup and policy of the European Central Bank (ECB).

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