EURUSD Bouncing Off Support

EURUSD continues to hold at the 1.16-level support today despite persistent strength in USD. There’s an interesting report out from Reuters today citing sources ECB sources saying that the bank will refrain from any hawkish guidance after a rate hike next month with a view to downplaying expectations of back-to-back hikes. Inflation continues to rise in Eurozone, driven by continued strength in energy prices. However, it seems the news has done little to dissuade EUR bulls with the pair remaining bid today, even in the face of weaker-than-forecast Eurozone data. We saw a sea of red today across Eurozone, French and German PMIs with French business activity seeing its sharpest monthly drop since 2020. For now, it seems that expectations of a hike next month along with the prospect of a follow-up hike (even if downplayed by the ECB) are keeping bulls encouraged here.

Hawkish FOMC Mins

On the USD front, last night’s FOMC minutes were firmly hawkish. However, upside is being tempered by rising optimism that a US/Iran peace deal is getting closer. If we see any further positive headlines this should bolster risk appetite, weighing on USD and allowing EURUSD room to push higher. The major catalyst will of course be any news that a deal has been done. In this scenario, USD is expected to fall heavily as oil prices plunger and risk assets push higher, leading EURUSD firmly higher too.

Technical Views

EURUSD

For now, the sell off has stalled into the 1.16-level where price is currently bouncing. If bulls can sustain this level, a reversal higher back towards the 1.1756 level looks likely. Alternatively, if we break lower, 1.1490 will be the next support to watch in line with bearish momentum studies readings.