The euro stops in front of the ECB; GBP / USD, lead on significant support

Key points of the article:

  • The euro recovered slightly, taking profits on commodity currencies
  • GBP / USD: A possible rebound from the strong support zone

Prejudice

Resistence

Support

Note

AUD / JPY

bullish

86.06

81.55

Rebond support 84.16

AUD / USD

bullish

0.755

0.699

Pull back on support 0.7280

EUR / AUD

bearish

1.62

1.4425

Rebound

EUR / CHF

bearish

1.0605

0.978

Rebound

EUR / GBP

Neutral

0.85

0.7565

EUR / JPY

bearish

133.5

125

Bounce on the support

EUR / USD

bearish

1.15

1.0766

Doji in the 1.0800 support zone

GBP / JPY

bearish

158.25

148.95

GBP / USD

bearish

1.3645

1.311

Test support

NZD / USD

Neutral

0.722

0.663

Rejection MM200

USD / CHF

Neutral

0.9368

0.909

USD / CAD

bullish

1.2957

1,265

Oblique weekly in support

USD / JPY

bullish

116.36

113.5

The euro recovered slightly, taking profits on commodity currencies

The euro catches its breath ahead of this week’s central bank meeting as commodity currencies retreated from recent highs as investors believe hikes in energy, grain and metals prices could end up reducing demand in the long run. period.

The euro remained flat early in trading and gained around $ 1.0900 after hitting a 22-month low of $ 1.0806 on Monday, aided by a Bloomberg News report citing unnamed officials and indicating that the ‘European Union was discussing a joint bond issue.

Such an initiative could be synonymous with stimulus measures and a step towards a fiscal union. But the details were scarce and analysts also said the euro is unlikely to rise much while there were concerns about the spread of the war in Ukraine. But the situation on the front is not improving.

The US dollar index also halted its advance just below the 22-month high of 99.45.

The short-term pessimism is driven by the notion that investor fears of a war extending beyond Ukraine’s borders will not quickly dissipate.

The euro remains fragile and could reach the support zone above $ 1.0636 by the end of the quarter before recovering to $ 1.15 by the end of the year if some sort of deal is reached to contain the fighting, but it would likely fall towards parity if the war spreads.

The European Central Bank meets Thursday, with the specter of stagflation prompting economists to speculate that policy makers could delay rate hikes until the end of the year.

Enthusiasm for commodity-related currencies also appears to be waning, as high commodity costs also act as a drag on global consumption and growth.

Market participants may switch from buying Australian dollars because commodity prices are high to selling Australian dollars because very high commodity prices will lead to the destruction of demand.

Rising oil costs are also tarnishing the yen’s luster as a safe haven as import spending pushed Japan to its largest current account deficit since 2014 through January. The yen hit a three-week low of 115.87 this morning.

GBP / USD: A possible rebound from the strong support zone

The British pound, which was sold off at the same time as the euro, barely rose yesterday and remained stuck near its 16-month low at $ 1.3100.

This level represents important support corresponding to the November and December 2020 lows. The trend is bearish below the 13 and 34 period descending moving averages. A break of this level could prolong the decline of the pound towards 1.2857.

However, in the short term the breakout target of 1.3358 has been reached. Furthermore, the RSI is in the oversold zone and the price gap with the moving averages is significant. A retracement is therefore possible should the support hold with a possible return to 1.3272.

Evolution of the pound against the dollar in the daily data:

Forex Morning Meeting: the euro stops in front of the ECB;  GBP / USD, lead on significant support

Twitter @CDamestoy

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