Euro looks to consolidate the rebound and re-targets 1.1000

• Euro appears slightly bid in the area just below 1.1000 the figure.
• Equities in Europe opened markedly on the defensive on Thursday.
• EUR/USD trades in monthly highs near the 1.1000 mark.
• Fed Powell’s second testimony should keep the hawkish tone.
• The USD Index (DXY) challenges monthly lows near 102.00.

Despite markets’ mood seems to be tilted towards the risk-off trade in the wake of the opening bell in the old continent on Thursday, the Euro (EUR) battles to extend its Wednesday’s pronounced rebound and encourages EUR/USD to trade at shouting distance from the psychological barrier at 1.1000.

The uptick in the pair comes on the back of the so far inconclusive price action around the Greenback, which in turn motivates the USD Index (DXY) to hover around monthly lows in the 102.00 neighbourhood.

In the more macro scenario, the potential next steps from both the Federal Reserve and the European Central Bank (ECB) when it comes to the continuation of the normalization of their monetary conditions continue to be in the centre of the debate along with increasing speculation of an economic slowdown on both sides of the Atlantic.

Back at the Fed, Chair Powell hinted at the idea that more needs to be done to bring inflation back to the Fed’s 2.0% target, at the time when he left the door wide open to further tightening in the second half of the year. On this, consensus among investors signal two more 25 bps rate hikes or a 50 bps move in the next months.

Absent releases in Europe, the US calendar will gather all the attention with the publication of the usual Initial Jobless Claims, ahead of the Chicago Fed National Activity Index, the CB Leading Index, Existing Home Sales and speeches by FOMC C. Waller (permanent voter, hawk), FOMC M. Bowman (permanent voter, centrist), Cleveland Fed L. Mester (2024 voter, hawk) and Richmond Fed T. Barkin (2024 voter, centrist).

Daily digest market movers: Euro gets ready for a move above 1.1000

• The US Dollar puts the key 102.00 support to the test on Thursday.
• Market participants expect no surprises at Powell’s second testimony.
• Concerns around the Chinese recovery continue to weigh on sentiment.
• Recession jitters resurfaced on the back of imminent further tightening.
• The FX universe continues to monitor the ECB-Fed divergence.

Technical Analysis: Next on the upside comes the 2023 peak near 1.1100

EUR/USD rebounded sharply and advanced to fresh weekly highs on Wednesday. That said, the pair is expected to quickly retest the psychological 1.1000 barrier and therefore pave the way for a subsequent challenge of the 2023 high of 1.1095 (April 26), the round level of 1.1100, and the weekly high of 1.1184 (March 31, 2022), which is supported by the 200-week SMA, currently at 1.1181.

In the event that the bears take control, initial support emerges at the weekly low of 1,0891 (June 20) prior to the temporary contention at the 55-day SMA at 1.0883. Should this level be breached, there are no significant support levels until the May low of 1.0635 (May 31), followed by the March low of 1.0516 (March 15) and the 2023 low of 1.0481 (January 6).