EUR/USD – ECB Meets tomorrow, interest rate hike on the cards?
XAU/USD – ECB meeting and US CPI to be the main catalyst for gold this week.
EUR/USD – ECB Meets tomorrow, interest rate hike on the cards?
Resistance Zone: 1.115 to 1.118
Key Resistance: 1.093
Major Pivot Point: 1.087
Support Zone: 1.056
200 Day SMA – Green Line
50 Day SMA – Red Line
CBOE VIX – Volatility Index @24.02 -1.05 (-4.19%)
Trade Insights EUR/USD –
The chart shows Viable long positions above the Key Support Level at 1.056, with the first target of the Major Pivot Point at 1.087, and after confirmation above the Pivot then further long positions towards the Key Resistance level at 1.093 and then to test the Resistance Zone at 1.115 to 1.118
Alternatively, Short positions below the Key Support Level at 1.056 with the target to head towards the Support Zone at 1.038 to 1.035.
EUR/USD pair is in another leg of breaking away from the longer-term downtrend and descending channel that started in May 2021. A full year of decline with a few attempts of downtrend breakout has brought the prices down to touch the trough of 1.035 on 13th May 2022. Since then, the prices have recovered over several sessions to hit the Major Pivot point at 1.087 which proved a bit difficult for the pair's breakthrough. Euro is not trading just above the upper limit of the descending channel and somewhat consolidating under the Major Pivot. The next ECB Meeting tomorrow could prove decisive for the Euro where the ECB might lay the foundation for a rapid interest rate hike if there is no decision for a small hike. Any decision or sign of the Central bank leaning to raise the interest rate could initiate a bigger recovery for EUR/USD pair.
As of now, the chart shows a sign of weakness in the buyers’ conviction. The Stochastic indicator is moving in tandem with the EUR/USD pair and there is no divergence signal at this stage. The prices are just trading a little below the 50-day SMA red line and well below the 200 Day SMA green line. This could be a good opportunity for the Euro Bulls to push prices higher above the key resistance level at 1.093 and this week is loaded with some key economic news.
Fundamental Overview:
Could this ongoing consolidation in Euro against the other major currencies be setting up for a change in the direction of the Euro? The ECB meeting tomorrow is a high-impact event for the Euro as ECB is expected to end the quantitative easing and finally either raise interest rates or lay the foundation for it to be done in the next month. The Euro Zone inflation is currently at 8.1% year on year in May which is the highest level on record so far. Any move to raise interest rate would be good, especially for the Euro but in a limited way as the US dollar’s yield advantage is already ahead of what Euro could offer to the investors.
XAU/USD – ECB meeting and US CPI to be the main catalysts for gold this week.
Resistance Zone: $1920 to $1940
Key Resistance: $1895
Major Pivot Point: $1870
Key Support Level: $1820
Support Zone: $1790 to 1770
200 Day SMA – Green Line
50 Day SMA – Red Line
CBOE VIX – Volatility Index @ 23.96 -0.06 (-0.25%)
Trade Insights –
XAU/USD – Chart shows Viable long positions above the Pivot at $1870 with the first target of Key Resistance Level @ $1895 and after consolidation towards the Resistance Zone at $1920 to $1940.
Alternatively, Short positions below the Pivot at $1870 if the pair drops out of the ascending parallel channel with the target of Key support level at $1820 and then head towards the Support Zone between $1790 to $1770.
XAU/USD chart shows that the gold prices are moving higher gradually forming Higher Highs and higher lows. After changing into an uptrend, the Gold is trading in an ascending channel in a tight range. The Pivot has moved higher to $1870 from $1850 and this is the point where Gold retrieved twice in the past couple of weeks. The Resistance and Support Zones are still in the same place and Gold is currently trading in the middle of these zones. The dollar Index is climbing higher against many other major pairs as also the US 10 Years Bond yield is moving higher and currently is at 3.027%.
The pair is trading above the 20 Day SMA and 50 Day SMA lines as both are shaping into a mild bullish slope. The Stochastic Oscillator has already signaled a Divergence after which the prices dropped a bit, and the oscillator is still heading downwards. This possibly could mean that gold prices can drop further and out of the ascending Channel if the CPI data and ECB meeting outcomes are not favorable for the pair.
Fundamental Overview:
Federal Reserve is increasingly bending towards Quantitative Tightening (QT) as compared to its opposite - Quantitative Easing as the main tool to tame the inflation this year. QT results in reduced liquidity in the treasury market and that drives yields and the US dollar higher. This week we have US inflation data due, and it is expected that the inflation would remain above 8% causing more interest rate hikes pushing yields and the dollar further up. For Gold prices, the next catalysts are the ECB meeting today and US CPI Data on Friday.
The information provided is of a general nature and is not intended to be personalised financial advice. The information provided is not intended to be a substitute for professional advice. You may seek appropriate personalised financial advice from a qualified professional to suit your individual circumstances.
Trading in Rockfort Markets derivative products may not be suitable for everyone as derivative products may be considered as high risk. Please ensure that you understand the risks involved. A Product Disclosure Statement can be obtained here and should be considered before trading with us.
Charts of the Week - EUR/USD – ECB Meets tomorrow, interest rate hike on the cards?
Charts of the Week - Technical Analysis
EUR/USD – ECB Meets tomorrow, interest rate hike on the cards?
Trade Insights EUR/USD –
The chart shows Viable long positions above the Key Support Level at 1.056, with the first target of the Major Pivot Point at 1.087, and after confirmation above the Pivot then further long positions towards the Key Resistance level at 1.093 and then to test the Resistance Zone at 1.115 to 1.118
Alternatively, Short positions below the Key Support Level at 1.056 with the target to head towards the Support Zone at 1.038 to 1.035.
EUR/USD Chart Analysis: Directional bias - 2 Weeks
EUR/USD pair is in another leg of breaking away from the longer-term downtrend and descending channel that started in May 2021. A full year of decline with a few attempts of downtrend breakout has brought the prices down to touch the trough of 1.035 on 13th May 2022. Since then, the prices have recovered over several sessions to hit the Major Pivot point at 1.087 which proved a bit difficult for the pair's breakthrough. Euro is not trading just above the upper limit of the descending channel and somewhat consolidating under the Major Pivot. The next ECB Meeting tomorrow could prove decisive for the Euro where the ECB might lay the foundation for a rapid interest rate hike if there is no decision for a small hike. Any decision or sign of the Central bank leaning to raise the interest rate could initiate a bigger recovery for EUR/USD pair.
As of now, the chart shows a sign of weakness in the buyers’ conviction. The Stochastic indicator is moving in tandem with the EUR/USD pair and there is no divergence signal at this stage. The prices are just trading a little below the 50-day SMA red line and well below the 200 Day SMA green line. This could be a good opportunity for the Euro Bulls to push prices higher above the key resistance level at 1.093 and this week is loaded with some key economic news.
Fundamental Overview:
Could this ongoing consolidation in Euro against the other major currencies be setting up for a change in the direction of the Euro? The ECB meeting tomorrow is a high-impact event for the Euro as ECB is expected to end the quantitative easing and finally either raise interest rates or lay the foundation for it to be done in the next month. The Euro Zone inflation is currently at 8.1% year on year in May which is the highest level on record so far. Any move to raise interest rate would be good, especially for the Euro but in a limited way as the US dollar’s yield advantage is already ahead of what Euro could offer to the investors.
XAU/USD – ECB meeting and US CPI to be the main catalysts for gold this week.
Trade Insights –
XAU/USD – Chart shows Viable long positions above the Pivot at $1870 with the first target of Key Resistance Level @ $1895 and after consolidation towards the Resistance Zone at $1920 to $1940.
Alternatively, Short positions below the Pivot at $1870 if the pair drops out of the ascending parallel channel with the target of Key support level at $1820 and then head towards the Support Zone between $1790 to $1770.
XAU/USD Chart Analysis: Directional bias - 2 Weeks
XAU/USD chart shows that the gold prices are moving higher gradually forming Higher Highs and higher lows. After changing into an uptrend, the Gold is trading in an ascending channel in a tight range. The Pivot has moved higher to $1870 from $1850 and this is the point where Gold retrieved twice in the past couple of weeks. The Resistance and Support Zones are still in the same place and Gold is currently trading in the middle of these zones. The dollar Index is climbing higher against many other major pairs as also the US 10 Years Bond yield is moving higher and currently is at 3.027%.
The pair is trading above the 20 Day SMA and 50 Day SMA lines as both are shaping into a mild bullish slope. The Stochastic Oscillator has already signaled a Divergence after which the prices dropped a bit, and the oscillator is still heading downwards. This possibly could mean that gold prices can drop further and out of the ascending Channel if the CPI data and ECB meeting outcomes are not favorable for the pair.
Fundamental Overview:
Federal Reserve is increasingly bending towards Quantitative Tightening (QT) as compared to its opposite - Quantitative Easing as the main tool to tame the inflation this year. QT results in reduced liquidity in the treasury market and that drives yields and the US dollar higher. This week we have US inflation data due, and it is expected that the inflation would remain above 8% causing more interest rate hikes pushing yields and the dollar further up. For Gold prices, the next catalysts are the ECB meeting today and US CPI Data on Friday.
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The information provided is of a general nature and is not intended to be personalised financial advice. The information provided is not intended to be a substitute for professional advice. You may seek appropriate personalised financial advice from a qualified professional to suit your individual circumstances.
Vishal, R.
June 8, 2022
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