EUR/USD News and Analysis

  • EU leaders converge on Brussels right this moment to debate vital gasoline shortages forward of the winter interval
  • EUR/USD potential ‘double bottom’ formation faces upside challenges
  • ECB’s Forum on Central Banking subsequent week might present perception into thriller “anti-fragmentation” device

EU Leaders head to Brussels to Discuss Serious Gas Shortages

EU leaders have make their method to Brussels to proceed discussions round options to the present gasoline provide situation that has dire penalties for Germany’s industrial sector this winter. Russia has equipped round 60% much less gasoline than requested by Germany which has knock on results for different international locations inside the euro zone as different provide stays sparse.

German Economy Minister Robert Habeck warned that some industries might must shut down within the winter if Russian provide stays at present ranges. European international locations usually use this time to retailer gasoline wanted for the chilly winters and shockingly low stock ranges will doubtless end in robust decisions having to be made. Earlier this week the German Minister raised the “alarm stage” to a degree the place quickly gasoline corporations will be capable to go on increased vitality prices on to shoppers. Prior euro positive factors on the again of the European Central Bank’s (ECB) advised 25 foundation level hike in July, with a doable 50 bps hike in September is more likely to be capped by development issues for Europe’s largest financial system.

An extra headache surfaces within the type of the Nord Stream 1 pipeline which is because of bear deliberate upkeep between 11 and 21 July. A gradual return to service threatens to tighten gasoline provides even additional.

EUR/USD Key Technical Levels

The euro’s transient rally stemmed from the discuss of carry off in July with a possible 50 bps in September however it solely took flight after the market had digested the unsubstantiated point out of the Bank’s “anti-fragmentation bond tool”, which despatched the pair sharply decrease. EUR/USD continues to be under the pre-ECB assembly degree of 1.0716 and has confronted challenges trying to commerce above the 2020 low at 1.0635.

Technically, we might nonetheless be within the technique of confirming a double backside sample, a bullish reversal sample, however this could develop into clearer upon a transfer above 1.0800 which is much from present ranges. First, we would want to see worth maintain above the 1.0635 degree, then 1.0758 as these ranges make up close by resistance. In the occasion, the threats to development within the euro zone develop into extra severe than initially anticipated, assist would seem on the 1.0450 degree adopted by 1.0340 – a break of this degree would reduce the credibility of the double backside formation.

Daily EUR/USD Chart

Source: TradingView, ready by Richard Snow

Major Risk Events within the Next 7 Days

A possible standout on the financial calendar is the ECB’s equal of the Jackson Hole Economic Symposium, which is to be held in Sintra Portugal. The three-day occasion is scheduled to happen between the 24th and 27th of June with ECB President Christine Lagarde participating in a coverage panel dialogue on the ultimate day. Markets will look out for any insights into the little-known “anti-fragmentation tool”.

The finalized determine for US GDP in Q1 is due subsequent week – anticipated to substantiate a contraction. On Thursday PCE inflation information is due for launch with core PCE exhibiting indicators of moderating as prior prints eased. Another decrease print is unlikely to sway the Fed as Jerome Powell talked about that the nuanced declines in PCE information have a protracted method to go earlier than the Fed can conclude that inflationary pressures are subsiding. On Friday we’ve got the euro space (flash) inflation information for June with core anticipated to degree out at 3.8% whereas headline inflation anticipated increased at 8.3%

EUR/USD Update: Recession Fears, as Reduced Russian Gas Grips Germany

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— Written by Richard Snow for

Contact and comply with Richard on Twitter: @RichardSnowFX

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