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Asset Watch
Thursday, June 15, 2023
• Markets expectations from today’s ECB Meeting
• EUR/USD price corrects its downtrend move, levels to consider.
Markets await the European Central Bank rate decision today at 4:30 PM UAE time. Investors expect the ECB to hike the European interest rates by 25 basis points at this meeting, to the 4.0% level.
It is also expected that the central bank to continue hinting that the raising interest rates cycle has not finished yet, despite the significant fall in the European inflation headline to 6.1% YoY in May (thanks to the energy prices decline) although, the European CPI remains very high and far from its target set at 2%. Investors expect the ECB to accelerate its quantitative tightening operations, starting from July.
It should be noted that the market has already priced in a 25-basis point rate hike at today’s meeting, and if the ECB chooses to not to hike this could affect the Euro price negatively against other currencies.
Investors will be waiting also the European central bank economic projections for growth and inflation levels in the short and long terms. The ECB is likely to reduce its growth expectations for 2023 and 2024 and to keep its inflation expectations published last March unchanged. Additionally, investors will tune in to the ECB press conference at 4:45 pm UAE time to get more clarity about the European monetary policy.
Chart source: TradingView
On the 6th of June, the EUR/USD pair corrected higher and created a higher law at 1.0667, indicating to taking profits operations from some sellers combined with the entry of new buyers.
Currently, the price moves within the trading zone 1.0730- 1.0873 and a daily close above the high end of the mentioned zone ie, above the 50-day simple moving average, could encourage some traders to start a bullish momentum and rally the price towards 1.1060. However, the resistance level located at 1.0900, 1.0981 and 1.1020 respectively should be watched closely.
On the other hand, a daily close below the low end of the mentioned above trading zone may embolden some traders to resume the stalled bearish momentum and press the pair towards 1.0559 level. That said, the support levels located at 1.0658, 1.0631, and 1.0595, respectively should be kept in focus.
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