empty
14.05.2024 12:49 AM
ECB prepares markets for June rate cut. Overview of EUR/USD

The euro continues its bullish correction for the fourth consecutive week, but there is uncertainty regarding the sustainability of this movement. In the absence of economic news, the euro has not found an impetus for growth, despite the efforts of some European Central Bank representatives who have commented on recent changes in inflation, employment, and economic recovery.

The minutes of the ECB meeting published on Friday showed increased confidence that inflation is on track back to 2% and it also confirmed rate cut intentions for June. Some ECB members were ready to cut rates as early as April, but the minutes suggested a preference for June if "...additional evidence received by then confirmed the medium-term inflation outlook embedded in the March projections." If the market becomes confident in a rate cut in June, the euro will likely fall against the dollar.

This image is no longer relevant

The second estimate of GDP for the first quarter will be published on Wednesday. The initial estimate was 0.3%, marking the first quarter of growth since the second quarter of 2023 and the strongest since the third quarter of 2022. This fairly confident recovery was a surprise following a very weak 2023 (only the COVID-affected 2020 was worse). If the initial estimate does not become worse, the euro may have grounds to correct higher. Supporting a "good" scenario is the rise in April's PMI, particularly in Germany, which left the negative territory for the first time since June 2023.

The weekly change in the euro amounted to +1.5 billion, the net short position was liquidated and a cumulative long position of 0.6 billion was formed. A neutral position; a fragile equilibrium has been established after large-scale closures of long positions on the euro. However, the report marked large volumes of euro purchases for the second consecutive week. The price has moved above the long-term average.

This image is no longer relevant

A week ago, we suggested that the EUR/USD pair has a high chance of rising further. The euro is trading near the upper boundary of the bearish channel. In the absence of a clear driver, the pair traded in a sideways range last week, with the nearest resistance at 1.0810/20 holding for now. However, the chances of successfully breaking through this resistance seem to have increased. The next target is 1.0980, and we expect stronger movements to start after the release of the US inflation report on Wednesday.

Kuvat Raharjo,
Analytical expert of InstaForex
© 2007-2025
Select timeframe
5
min
15
min
30
min
1
hour
4
hours
1
day
1
week
Earn on cryptocurrency rate changes with InstaForex
Download MetaTrader 4 and open your first trade
  • Grand Choice
    Contest by
    InstaForex
    InstaForex always strives to help you
    fulfill your biggest dreams.
    JOIN CONTEST

Recommended Stories

Gold Rebounds as Fiscal Risks Resurface

Gold is swinging between extremes as spring draws to a close. The week ending May 16 was the worst for the precious metal due to optimism that, following a trade

Marek Petkovich 17:31 2025-05-23 UTC+2

AUD/JPY. Analysis and Forecast

Today, the AUD/JPY pair has started to attract buying interest, halting its pullback from the monthly high as demand for the Australian dollar emerges. Today's talks between U.S. Deputy Secretary

Irina Yanina 17:25 2025-05-23 UTC+2

USD/CAD. Analysis and Forecast

The pair is trending lower, dropping close to the key psychological level of 1.3800 amid broad-based U.S. dollar weakness. Traders have raised their expectations for Federal Reserve rate cuts following

Irina Yanina 16:43 2025-05-23 UTC+2

USD declares war on EUR

What's new is often just what's been forgotten. As spring draws to a close, the long-dismissed mantra "sell America" is making a comeback in markets. The phrase gained traction following

Marek Petkovich 14:59 2025-05-23 UTC+2

USD/JPY: what happens with yen?

The USD/JPY pair is experiencing heightened price turbulence. At the end of April, the pair sharply declined, hitting a 7-month low at 139.90. Then, last week, a northbound impulse pushed

Irina Manzenko 13:52 2025-05-23 UTC+2

Market Chaos to Continue (There is a likelihood of continued local declines in #USDX and gold prices)

Markets continue to act blindly amid the chaotic actions of Donald Trump, who is trying to pull the U.S. out of a deep, all-encompassing crisis like Baron Munchausen pulling himself

Pati Gani 10:19 2025-05-23 UTC+2

The Market Tucks Its Tail

A necessary project at the wrong time. The House of Representatives has approved Donald Trump's tax cut initiative. The President hopes it will help stimulate the economy and offset shortcomings

Marek Petkovich 09:29 2025-05-23 UTC+2

GBP/USD Overview – May 23: No Talks, but Hang in There

On Thursday, the GBP/USD currency pair traded relatively calmly, but like EUR/USD, it has been rising for two weeks. At first glance, one might wonder what reasons traders have

Paolo Greco 08:15 2025-05-23 UTC+2

EUR/USD Overview – May 23: The Rebellion Against the Dollar Continues

The EUR/USD currency pair traded relatively calmly on Thursday, yet it has risen significantly over the past two weeks. This movement can be interpreted in several ways. From a technical

Paolo Greco 08:15 2025-05-23 UTC+2

What to Pay Attention to on May 23? A Breakdown of Fundamental Events for Beginners

Very few macroeconomic reports are scheduled for Friday. Only two are noteworthy: the final estimate of Germany's Q1 GDP and April's UK retail sales data. The German GDP report

Paolo Greco 05:58 2025-05-23 UTC+2
Can't speak right now?
Ask your question in the chat.
Widget callback
 

Dear visitor,

Your IP address shows that you are currently located in the USA. If you are a resident of the United States, you are prohibited from using the services of InstaFintech Group including online trading, online transfers, deposit/withdrawal of funds, etc.

If you think you are seeing this message by mistake and your location is not the US, kindly proceed to the website. Otherwise, you must leave the website in order to comply with government restrictions.

Why does your IP address show your location as the USA?

  • - you are using a VPN provided by a hosting company based in the United States;
  • - your IP does not have proper WHOIS records;
  • - an error occurred in the WHOIS geolocation database.

Please confirm whether you are a US resident or not by clicking the relevant button below. If you choose the wrong option, being a US resident, you will not be able to open an account with InstaForex anyway.

We are sorry for any inconvenience caused by this message.