Hello, dear traders! On Thursday, EUR/USD reversed to the downside and almost approached the lower line of the ascending trend corridor, which indicates a bullish bias. Consolidation below the corridor will increase the likelihood of a drop to 1.0750 and 1.0609 levels.
In light of a 0.25% raise in the Fed's interest rates, the greenback edged even lower. In fact, it had been bearish before the Fed's meeting, and the hawkish decisions should have caused an increase in the dollar. However, traders spotted some dovish hints in Powell's remarks. Moreover, the end of the tightening cycle is nearing. The difference in the ECB's and the Fed's stance on interest rates allowed the euro to strengthen this week. The ECB lifted rates by 0.50% and made it clear that there would be a few more hikes. The Fed might announce the end of tightening already at the next meeting after two more inflation reports are delivered. If prices go down, the Fed will have no reason for further rate increases.
In this light, the euro is likely to be bullish in the coming two months. Still, the ECB's rates will hardly be raised to 5% or higher. Therefore, the pair may ascend. Still, a drop in value is not excluded. In terms of graphic analysis, growth is more likely.
In the 4-hour chart, the pair consolidated above the descending trend corridor yesterday. So, growth may extend to the 50.0% retracement level of 1.0941. Neither of the indicators has shown signs of impending divergency. If the price bounces off 1.0540, it may then head toward the 38.2% Fibonacci level of 1.0610. Consolidation above it will increase the likelihood of an increase to the 61.8% retracement level of 1.1273.
Commitments of Traders:
Over the reporting week, speculators closed 6,886 longs and opened 6,865 shorts. Sentiment remains bullish and keeps getting stronger. Still, the latest COT report dates back to March 7. They keep coming with a delay of several weeks. Speculators currently hold 234,000 long positions and 85,000 short ones. The euro has been bearish for several weeks now, and fresh COT data is missing. Over the past several weeks, the pair has been on the rise despite having little support from fundamental factors. Anyway, the outlook for EUR/USD is going to be positive for as long as the ECB raises rates by 0.50%.
Eurozone: Manufacturing PMI (09-00 UTC); Services PMI (09-00 UTC).
United States – Durable Goods Orders (12-30 UTC); Manufacturing PMI (13-45 UTC); Services PMI (13-45 UTC).
The macroeconomic calendar contains a few interesting reports on Friday. Therefore, fundamental factors may have a mild influence on market sentiment.
Outlook for GBP/USD:
The trading plan will be to sell after consolidation below 1.0861 on the 1-hour chart, with the target at 1.0750. If the pair bounces off the lower line of the corridor, we close short positions and open long ones with targets at 1.0920–1.0941 on the 1-hour chart.