Dollar Trading Lower Against Euro
After Fed announcements early last month led to dollar recovery, we have seen the USD trading near a two month low against the euro.
The drop is likely due to speculation of poor US payroll figures along with speculation that the European Central Bank will remain hawkish and raise interest rates to curb inflation in the eurozone.
A Bloomberg news survey showed that 58 of 59 economists interviewed, are expecting a quarter percent rise in the euro interest rate - taking the benchmark rate to 4 percent. (Bloomberg)
Toru Umemoto of Barclays Capital Inc., Tokyo said, “bad news comes from the U.S. everyday. The ECB’s rate hike today is a done deal and the ECB will remain hawkish. The euro may rise above $1.60 against the dollar today.” - Bloomberg
Technical Chart: EURUSD 1-hour
Looking at the present 1-hour chart for the euro/dollar, we should expect to see the euro rise after the ECB announcement. Although bear in mind that the market has probably already priced in the likely quarter percent ECB benchmark rate rise.
In the longer timeframe we could see the euro rise toward the $1.60 mark. However, look for the key areas of retracement on the chart. The 23.6% Fibonacci line looks like being a strong area of support, so if after the ECB news breaks, we could look for retracement around this area (approx. $1.5780) for an entry point to go long in favour of the euro.
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