The flash estimate for Eurozone inflation for the year ending June came in slightly higher than expected: marginally in positive territory for the headline number and 0.9% for the core. This was a positive for EURUSD, enough to offset the rumour that the European Central Bank may be looking at ways to make bond purchasing easier and thus increase the pace of QE.
US economic data continues to come in around expectations and, with risk appetite returning, rate-cut possibilities are being removed from the fed funds futures curve. However, no hikes are priced in either so it's a stand-off, probably until next week’s payrolls report.
There are no significant data releases in the Eurozone or US today so markets will likely trade quietly heading into the Independence Day long weekend.
Management and risk description
The euro’s decline has traced out a corrective “Zigzag” structure (in the context of the Elliott Wave Principle) and with support now at 1.1080/1.1055 looking for rally above 1.1155 resistance onto 1.1200/1.1240, en route to the mid 1.1300s.
In the “bigger picture”, the euro remains entrenched within broad, contracting 1.0460 – 1.1710 triangle consolidation, wherein a good case can be made that a final e-Wave rally is now underway toward the mid 1.1500s area over the coming days/weeks (see daily chart below).
Entry: any dip to 1.1080/1.1065 today would present a buying opportunity.
Stop: 1.1019, initially.
Time horizon: allow several days for target to be met.
EURUSD daily chart (click to expand)
EURUSD weekly chart (click to expand)
Source: ThomsonReuters. Create your own charts with SaxoTrader; click here to learn more
— Edited by Gayle Bryant