EURO FUNDAMENTAL BACKDROP
The euro managed to claw back some lost gains from yesterday’s cautious market sentiment after German GfK consumer confidence edged higher for the 7th consecutive month indicating consumer optimism around future income expectations.
ECB INTEREST RATE PROBABILITIES
Money markets are significantly more hawkish than last week as shown in the table below. Implied European Central Bank (ECB) rate hikes amount to almost 70bps in December 2023 up from 60bps last week.
The attraction for safe-haven assets took away from aggressive ECB guidance due to the resurgence of the banking crisis (First Republic Bank). Looking ahead, US durable goods orders are scheduled and expected to print higher than the February figure – supportive for the US dollar while the US trading could spark the risk-off appetite once more, weighing negatively on the euro. The ECB’s Vice President Luis de Guindos is speaking at Greece’s economic forum in Delphi which may provide some midday volatility.
EUR/USD ECONOMIC CALENDAR
Source: DailyFX economic calendar
EUR/USD DAILY CHART
Chart prepared by Warren Venketas, IG
Daily EUR/USD price action stays planted around the 1.1000 psychological handle within an ascending channel formation (black). If banking fears continue to grip markets, we could see a break of channel support, exposing subsequent support zones.
- 1.1185 (March 2022 swing high)
- Channel support
IG CLIENT SENTIMENT DATA: BEARISH
IGCS shows retail traders are currently SHORT on EUR/USD, with 59% of traders currently holding short positions (as of this writing). At DailyFX we typically take a contrarian view to crowd sentiment but due to recent changes in long and short positioning, we arrive at a short-term downside disposition.