In the same trading path for the past week, the price of the EUR/USD currency pair is moving during this important week’s trading. This is amid strong bearish momentum, which moved on its impact towards the 1.0396 support level. It settled around the 1.0450 level at the time of writing the analysis, before announcing the reading of the ZEW index of German economic confidence. The euro tumbled due to a toxic mix of domestic and international headwinds but will likely remain under pressure in the coming days if US bond yields and the US Federal Reserve’s policy outlook continue to dampen risk appetite.

The currency pair’s struggles increased in the forex market after US inflation figures surprised to the upside expectations for the month of May on Friday and prompted the market to revise its expectations for US interest rates in the coming months. That data lifted US bond yields and dollar exchange rates while fueling an early selloff in global stock markets that weighed heavily on many currencies, although the Euro was also struggling in the wake of last week’s historic European Central Bank decision.

The euro was unable to capitalize when the European Central Bank said last Thursday that it would start raising interest rates in the euro zone in July and that it expects to raise borrowing costs in a sustainable manner over the coming months. Many analysts say this reflects market concerns about higher rates. It means the bond markets in southern Europe. The European Central Bank also announced a plan to use the reinvestment of the €1.85 trillion bond portfolio obtained through the Pandemic Emergency Purchase Program in order to prevent disproportionate and destabilizing increases in financing costs for the most financially fragile eurozone members.

This has done little to prevent markets from expressing their concerns about how southern European economies and bond markets will perform as interest rates rise in the bloc, and these kinds of concerns tend to weigh on the euro, which may now be more likely to strengthen the dollar. Commenting on the outlook, Silvia Ardajna, chief European economist at Barclays, said, “The risk of a repeat of a summer like 2011 has increased as the market may want to find out more about conditions (spread levels and growth velocity) that the ECB may view as weak in monetary policy transmission.”

According to the technical analysis of the pair: The general trend of the EUR/USD pair is to the downside and the breach of the support 1.0400 supports a stronger control of the bears on the trend. Currently, the closest trend targets are the support levels 1.0380 and 1.0290, those levels are sufficient to push the technical indicators towards strong oversold levels from which one can think of buying opportunities. The EUR/USD currency pair may remain under downward pressure until the US Central Bank’s monetary policy decisions are announced tomorrow.

On the upside, the breach of the 1.0600 and 1.0755 resistance levels will have an impact on the bulls’ sentiment for the move.

Recently, the monetary policy officials of the European Central Bank increased the talk about the most appropriate time to raise interest rates to keep pace with the path of the rest of the global central banks. It is led by the US Federal Reserve to contain the hyperinflation caused by the epidemic and most recently the Russian / Ukrainian war. Accordingly, the EUR/USD currency pair found an opportunity to correct upwards to the resistance level of 1.0600, with a correction from its lowest level in five years. The currency pair is waiting for more momentum to move further out of the sharp descending channel.

Overall, the European Central Bank is moving towards a rate hike and the market is now considering the possibility of a massive 50bp hike in July, a development that could not be understood just weeks ago. The turnaround provided support for the Euro, especially against the British Pound which at the same time saw the Bank of England decline against market expectations of a series of rate hikes. “Relative rates have supported the pound against the euro for some time but not anymore with markets pricing in ECB rate hikes,” says Mikael Milhaug, senior analyst at Danske Bank. “Looking ahead, relative prices appear to be more supportive for the EUR/GBP.”

The minutes of the European Central Bank’s April monetary policy meeting were released last Thursday and showed that Governing Council members were concerned that the rise in inflation expectations could become “disorderly”. This describes a scenario that was an inflationary shock – in this case through higher energy and commodity prices – becoming embedded in the broader economy.

For example, through companies that raise the prices of goods and services, while employees can demand higher wages. Some Council members believed that the ECB could not wait for real wage developments to confirm rising inflation expectations and the time for rate hikes was fast approaching. “European Central Bank members continued to send hawkish signals, clearly leading the market to risk a 50 basis point rate hike in July,” says Jan von Gerrich, chief analyst at Nordea Markets. The decisions are made by the hawks of the European Central Bank. The ECB’s April meeting minutes just confirmed that hawks are increasingly gaining the upper hand in the discussions. The interest rate hike in July is no longer uncertain, the only uncertainty is whether it will be 25 basis points. or 50 basis points.”

In this regard, Dutch Central Bank Governor Claes Knott said in a recent interview that the European Central Bank should raise its key interest rate by 25 basis points in July, but it should not rule out a larger increase. “A larger increase should not be ruled out,” Knott said. “The next logical step would be half a percentage point.”

Nordea notes that market prices are now within 35 basis points of the highs that fell at the July meeting. A 50 basis point rise was unimaginable just weeks ago, and from a currency perspective, a lot depends on whether or not the ECB is meeting market expectations. For example, if the European Central Bank pushes this rate back, the euro will be responsible for giving back value to the British pound, the dollar, and other countries. (It can also be assumed that he has recently found momentum in support of rate hike expectations.)

If the European Central Bank validates this forecast and delivers a 50 basis point rise with its pointer to the possibility of further rallies, the EUR could gain value. The European Central Bank has consistently insisted that it only intends to normalize monetary policy gradually, and large 50bp hikes appear to be inconsistent with this guidance.

According to the technical analysis of the pair: Despite the recent rebound attempts of the EUR/USD currency pair, the general trend is still bearish. It is necessary to move strongly upwards to change, and the real reversal may occur, according to the performance on the daily chart below, by moving towards the resistance levels 1.0795 and 1.1000. In return the bears have the opportunity to return to the launch if the EUR/USD pair returns below the 1.0440 support level. The euro is awaiting the announcement of the important German Ifo number today and the German Central Bank report, amid a complete absence of important US economic data.

The EUR/USD exchange rate was unable to escape from the bottom of its recent low and entered the new week’s trading at the risk of further losses. The losses could see the single European currency slide towards some of its lowest levels since the first half of 2017 throughout the year during upcoming days. With the beginning of this week’s trading, the price of the EUR/USD pair moved in a range between the level of 1.0494 and the level of 1.0593 in the same ranges of the last trading sessions.

The Euro’s recovery has been attempted repeatedly last week as well as on Friday before the weekend with data from European Central Bank policy makers indicating that the timing of an initial rate hike in the Eurozone is likely to approach. European Central Bank Governing Council member Francois Villeroy de Gallo said on Friday that Frankfurt could raise the negative deposit rate of -0.5% “to positive territory” by the end of the year, while Executive Board member Isabel Schnabel suggested on Monday that the initial rise It may come as soon as July.

However, the EUR/USD exchange rate was unable to withstand any of its attempts to recover, and it may now be at risk of extending its recent streak of losses with a break below the 1.05 level over the coming days.

Juan Manuel Herrera, strategist at Scotiabank says: “There are few notes on the eurozone calendar over the next two weeks other than speeches from the European Central Bank, but markets seem to be in a safe place for the ECB’s price bets.” He added, “The technical picture for the euro continues to indicate more losses to the 1.04 level, after the consolidation period that lasted seven sessions. The analyst warned that the euro’s trading (mostly confined between 1.05 and 1.06 levels) helped it out of the oversold area on the RSI.

The euro’s ability to recover against the dollar has been hampered by rising US bond yields and economic risks associated with the currently stalled EU push towards a Russian oil embargo, although the single European currency faces other fresh and headwinds this week as well. This comes after it was widely reported that Chinese Prime Minister Li Keqiang called for intensified efforts by the authorities to save jobs and support families, while battling the repercussions of measures to contain the Corona virus in major urban centers, including Shanghai and Beijing.

“The employment situation is deteriorating along with the rest of the economy,” says Craig Botham, chief China economist at Pantheon Macroeconomics. All April PMIs point to high unemployment, despite government promises to support companies affected by the zero-Covid-19 policies.

The deteriorating economic background and the government’s increasing willingness to support Chinese growth pose downside risks to the renminbi and upside risks for the USD/CAD pair, which in turn indicates continued headwinds for many other currencies relative to the US dollar including the euro. To the extent that these factors add more to the baggage around the ankles of the euro against the dollar, it may be enough to see the euro drop below the 1.05 level and towards the 2017 lows around 1.0344 during the opening phase of the week’s trading.

According to the technical analysis of the pair: There is no change in my technical view of the price performance of the EUR/USD currency pair. The general trend is still bearish, and a breach of the 1.0500 support will increase the bears’ control over the trend, and therefore move towards stronger support levels and the closest ones after that 1.0435 and 1.0300, respectively. As mentioned before, continuing weaknesses – divergence in economic performance, the future of central bank policy tightening and the Russo-Ukrainian war support the current trend. On the upside, without breaching the resistance levels 1.0795 and 1.1000, the general trend of the EUR/USD will remain bearish, and the currency pair will be affected today by the announcement of the German ZEW index reading.

Eurodollar Outlook: HSBC cut its forecast last week and now expects the euro to reach $1.03 by the end of June and parity in the first months of next year.

The next couple of days could give us an idea as to where Bitcoin is going to end up, so a bit of patience could probably go a long way.

Bitcoin markets bounce a bit during the trading session on Wednesday as we are awaiting the FOMC statement. Most retail crypto traders have very little idea as to how much the Federal Reserve truly influences where Bitcoin goes, but at the end of the Wednesday session, we should have quite a bit more clarity as to what the monetary policy going forward for the Federal Reserve will be. This will in turn have a major influence on the US dollar, and by extension Bitcoin.

Keep in mind that the Federal Reserve not only has an interest rate decision, widely expected to be raising rates by 50 basis points, but it also has a statement and a press conference to get through. Once all of this is digested, traders will start to look try and figure out whether or not the Federal Reserve is going to remain as aggressive as they have priced into the markets or are going to leave some “wiggle room” for policy adjustment due to weaker than anticipated economic figures.

Bitcoin loves a loose Federal Reserve. If they suggest that the monetary policy will continue to be very flexible going forward, even though it may be more on the hawkish side, that might be enough to have Bitcoin and other risk assets start to take off. Quite frankly, the Federal Reserve does not care about Bitcoin, but it does have a bit of a knock-on effect as to what happens elsewhere. The $40,000 level above will be crucial to pay attention to, and a daily close above there could give buyers enough hope to start jumping in again. Keep in mind that the $37,500 level has been supportive as of late, and as long as we can stay above there we are in pretty good shape.

If we break down below $37,500, then the market is likely to go looking toward the $35,000 level. It is here where the “rubber meets the road”, meaning that we need to take a stand if Bitcoin is going to continue to be somewhat buoyant. If it breaks through that level, we are more likely than not going to see continued selling at that point. The next couple of days could give us an idea as to where Bitcoin is going to end up, so a bit of patience could probably go a long way.

All global financial markets, without exception, are awaiting the most important event of this week, which is the announcement of the US Federal Reserve.

The announcement is to raise US interest rates by half a point at once to confront the fiercest global inflation wave caused by the factors of the Corona pandemic and recently the Russian-Ukrainian war. Prior to this event, the price of gold settles down around the support level of $1869 an ounce, after losses to the support level of $1850 an ounce. Since last week’s trading, the gold price has been below the psychological resistance of $1900 an ounce until the important day happened.

In general, the gold market is affected by the tightening path of global central banks, especially the US Federal Reserve.

On the other hand, the gold market may take some momentum from another source, as the outbreak of the pandemic renewed in controlling investor sentiment, which paves the way for buying gold as a safe haven. On Wednesday, Beijing closed about 10% of stations in its extensive subway system as an additional measure against the spread of the Corona virus. Beijing has been on high alert for the spread of COVID-19, with restaurants and bars restricted to takeout only, gyms closed, and classes suspended indefinitely. The city’s major tourist sites, including the Forbidden City and the Beijing Zoo, have closed indoor exhibition halls, and are operating at only partial capacity.

A small number of communities where cases have been detected have been isolated. People living in “controlled” areas have been told to stay within city limits, including 12 areas considered high risk and another 35 considered medium risk. Taking a lighter touch in Beijing, China has generally adhered to its strict “zero COVID” approach restricting travel, testing entire cities, and setting up sprawling facilities to try to isolate every infected person. Lockdowns start with buildings and neighborhoods but spread citywide if the virus spreads widely.

That has caused the most disruption in Shanghai, as authorities slowly work to ease restrictions that have forced most of the city’s 26 million residents to stay in their apartments, apartment complexes or immediate neighborhoods for nearly a month, and in some cases longer.

According to the technical analysis of gold: The luster and luster of the bullish gold price will not return without the return of penetrating the psychological resistance of 1900 dollars an ounce, which stimulates the bulls to launch further higher. So far, there is a downward shift in the trend that may be supported by a move towards the support levels of 1848 and 1830 dollars, respectively. As I mentioned before, I still prefer buying gold from every descending level. Global geopolitical tensions and the pandemic’s survival in controlling sentiment, especially as it threatens the second largest economy in the world. These are enough factors to think about buying gold in the end.