Euro remains at the mercy of bears near 1.1100 – Crypto News – Crypto News
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A drop to 0.98 is more likely than a sustained recovery above parity – ING A drop to 0.98 is more likely than a sustained recovery above parity – ING

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Euro remains at the mercy of bears near 1.1100 – Crypto News

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  • Euro trades close to weekly lows near 1.1120 against the US Dollar.
  • Stocks in Europe mostly reverse the negative start on Friday.
  • EUR/USD risks further decline in the short-term horizon.
  • US, Eurozone economic calendars are empty at the end of the week.

The Euro (EUR) navigates within a tight range against the US Dollar (USD) at the end of the week, with EUR/USD still under pressure and hovering around the area of ​​weekly lows near 1.1120.

The strong Dollar’s rally this week has driven the pair sharply lower from its 2023 high near 1.1270 on Monday down to Thursday’s lows in the 1.1120/15 band.

Other than some profit taking in light of the pair’s recent strong advance, market chatter suggesting that the Federal Reserve may not end its rate-hiking campaign in July has also boosted the Dollar at the expense of risk assets.

Looking ahead, the pair’s spot price seems set for some consolidation ahead of crucial meetings next week by the Federal Reserve and the European Central Bank (ECB). While both central banks are likely to raise rates by 25 bps, an emerging divergence lies in their near-term plans regarding future tightening of their normalization programmes.

Furthermore, the Fed is seen as nearing the end of its hiking cycle, while some ECB Rate-setters have sounded less hawkish recently on the prospects for more hikes beyond summer.

In bond markets, yields on both sides of the Atlantic remain directionless during the European morning.

Daily digest market movers: Euro’s price actin remains subdued on Friday

  • The EUR maintains the trade near 1.1100 against the USD.
  • The USD Index remains bid and surpasses 101.00.
  • Speculation that the Fed could end its hiking cycle in July looks mitigated.
  • US and German bond yields lack clear direction so far on Friday.
  • The BoJ defended its current ultra-accommodative stance.
  • Retail Sales in the UK for June came in above expectations.

Technical Analysis: Euro faces a solid support around 1.1000

While EUR/USD continues to digest its marked weekly pullback, there is immediate contention at the weekly low of 1.1118 (July 20) ahead of the psychological 1.1000 mark, all seconded by provisional support at the 55-day and 100-day SMAs at 1.0897 and 1.0881, respectively. A loss of this region could open the door to a potential revisit to the July 6 low of 1.0833 ahead of the key 200-day SMA at 1.0687 and the May 31 low of 1.0635. South from here emerges the March 15 low of 1.0516 before the 2023 low of 1.0481 on January 6.

In case bulls regain the upper hand, the next up-barrier emerges at the 2023 high at 1.1275 (July 18). Once this level is cleared, there are no resistance levels of significance until the 2022 peak of 1.1495 recorded on February 10, which is closely followed by the round level of 1.1500.

In the longer run, the constructive view of EUR/USD appears unchanged as long as it trades above the key 200-day SMA.

ECB FAQs

The European Central Bank (ECB) in Frankfurt, Germany, is the reserve bank for the Eurozone. The ECB sets interest rates and manages monetary policy for the region.
The ECB’s primary mandate is to maintain price stability, which means keeping inflation at around 2%. Its primary tool for achieving this is by raising or lowering interest rates. Relatively high interest rates will usually result in a stronger Euro and vice versa.
The ECB Governing Council makes monetary policy decisions at meetings held eight times a year. Decisions are made by heads of the Eurozone national banks and six permanent members, including the President of the ECB, Christine Lagarde.

In extreme situations, the European Central Bank can enact a policy tool called Quantitative Easing. QE is the process by which the ECB prints Euros and uses them to buy assets – usually government or corporate bonds – from banks and other financial institutions. QE usually results in a weaker Euro.
QE is a last resort when simply lowering interest rates is unlikely to achieve the objective of price stability. The ECB used it during the Great Financial Crisis in 2009-11, in 2015 when inflation remained stubbornly low, as well as during the covid pandemic.

Quantitative tightening (QT) is the reverse of QE. It is undertaken after QE when an economic recovery is underway and inflation starts rising. Whilst in QE the European Central Bank (ECB) purchases government and corporate bonds from financial institutions to provide them with liquidity, in QT the ECB stops buying more bonds, and stops reinvesting the principal maturing on the bonds it already holds. It is usually positive (or bullish) for the Euro.

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