EURUSD Price oscillates above 1.0100, ECB rate hike in focus

  • EURUSD price is attempting to hold itself above 1.0100 ahead of stable Eurozone HICP figures.
  • The ECB is expected to elevate its interest rates this time.
  • The upbeat US Retail Sales are contaminated by higher price pressures.
EURUSD price is juggling in a narrow range of 1.0100-1.0114 in the Asian session. The pair is scaling sharply higher amid a sell-off in the US dollar index (DXY). The asset has displayed a bullish open test-drive price action as a minor downside move after opening found significant bids from the market participants. The major has comfortably established above Friday’s high at 1.0098 and is expected to extend gains further.

Meanwhile, the DXY is dropping firmly following the bearish bias observed on Friday. The DXY has slipped to near 107.77, at the press time, and has displayed a vertical downside move after surrendering the critical support of 108.00. The ongoing slaughter in the asset after failing to sustain above the crucial resistance of 109.00 has shifted the asset into a negative trajectory. Going forward, the asset may find a cushion around 107.50.

TechnicPrice pressures accelerate US Retail Sales

EURUSD price is aiming higher as the upbeat US Retail Sales are the outcome of soaring price pressures in the US economy. On Friday, US Retail Sales landed at 1%, much higher than the prior release of -0.3% and the expectations of 0.8%. Costly fossil fuels and food products have resulted in a sharp rise in US Retail Sales. This has underpinned the shared currency bulls against the greenback. Price pressures from oil and food products don’t add up to the upbeat Retail Sales qualitatively.

Lower Consumer Confidence forecasts the gloomy outlook

A broader slippage in consumer confidence as price pressures have bitten their paychecks is indicating a gloomy outlook ahead. This may further accelerate the EURUSD price going forward. There is no denying the fact that the confidence of consumers has trimmed significantly in the US economy. The US Michigan Consumer Sentiment Index (CSI) landed minutely higher at 51.1 that the estimates of 49.9 and the prior release of 50. The figure is well near the lowest in the past two years.

Fed’s interest rate is seen at 3.75% by 2022

Federal Reserve (Fed) policymakers are hiking their interest rates target for 2022 vigorously. St. Louis Fed Bank President James Bullard said on Friday that he expects to see good employment reports through the second half of this year, as reported by Reuters. Also, the interest rates could reach 3.75% by year-end. Fed’s Bullard doesn’t see a recession despite the economy seeing a slowdown in the trend pace of growth. Also, he stated that inflation will continue to surprise the market participants to the upside. On a broader note, the EURUSD price could be under the bear’s grip.

Stable Eurozone HICP numbers are expected

EURUSD is expected to display wild moves as Eurostat will report the Harmonized Index of Consumer Prices (HICP) on Tuesday, which is seen stable at 8.6% on an annual basis. Steady HICP figures in the eurozone are expected to delight the European Central Bank (ECB) as they won’t require moving furiously toward raising interest rates. Other Western nations are reporting a steep rise in their inflation rates. Also, the expectations are also stalling higher.

ECB monetary policy to be the key event this week

The interest rate policy by the ECB will be the key event this week, which will keep the EURUSD price on the tenterhooks. The central bank is likely to elevate its interest rates as higher inflation rates are resulting in large real income shocks for the households. Energy bills are soaring after the prohibition of oil imports from Russia. It is worth noting that the ECB has not elevated its interest rates yet. As a rate hike by 50 basis points these days is a new normal now, a similar rate for testing waters could be a decent approach for the ECB. The central bank has already concluded the Asset Purchase Program (APP). Now, the focus has shifted to interest rate

EURUSD technical analysis

EURUSD is scaling higher in a Rising Wedge pattern which signals a gradual upside move but holds a negative bias on a broader basis. The upper portion and lower portions of the aforementioned chart pattern are placed from Thursday’s high and low at 1.0048 and 0.9952 respectively.

The 20-and 50-period Exponential Moving Averages (EMAs) at 1.0078 and 1.0061 respectively are scaling higher, which adds to the upside filters. Meanwhile, the Relative Strength Index (RSI) (14) has shifted into the bullish range of 60.00-80.00, which signals more gains ahead.

A pullback move towards the 20-EMA at 1.0078 will result in a bargain buy for the market participants, which will drive the asset towards Wednesday’s high at 1.0123. A breach of the latter will open doors for July 6 low at 1.0617.

Alternatively, the shared currency bulls could lose momentum if the asset drops below the psychological support of 1.000. This will drag the asset towards Thursday’s low at 0.9952, followed by the round-level support at 0.9950.

EURUSD hourly chart