The EURUSD currency pair continues to move gradually towards its main downward target. At the same time, a corrective wave upwards for removing the overbought situation should not be excluded.
An agreement on the U.S. debt ceiling has been prepared, but not implemented yet. As it was written before, after the U.S. debt ceiling is increased, the Ministry of Finance will start borrowing money on the debt market to replenish the budget. Yields on the country's government bonds will begin to rise, providing additional support for the growth of the dollar.
However, now there is time for a slight attempt to increase the euro against the dollar.
Continuation of the rate by the U.S. regulator will be taken neutrally by the market.
Statements by representatives of the Federal Reserve (Fed) show the regulator's intention to keep interest rates unchanged in June. However, the further tightening of monetary policy in coming months is still possible in the market. The U.S. employment report on Friday will be a key point for the central bank to make a decision.
Eurozone inflation data for May were published today. They are better than expected. On the one hand, this means that EU rate forecasts will be softened relative to current expectations, which is negative for the euro. On the other hand, this signal could mean a weakening of inflation, not only in Europe, but around the world. In this case, it is a positive for the euro, as the Fed will also be easing monetary policy.
Consumer prices, excluding items such as fuel and food, rose by 5.3% compared to the previous May. In April, the growth rate was 5.6%. On the base of Bloomberg economists' survey, the data are below the average level of 5.5%.
According to the technical analysis, the EURUSD currency pair is attempting to form a flat movement. On the daily timeframe, a pattern similar to a hammer was formed yesterday. It can be a signal for the reversal of the quotes.
The resistance level, which was formed in the last trading days, will be the growth target. It corresponds to the price of 1.075. Stop-loss can be set at the renewal of the local lows at 1.063.
Growth of the EURUSD currency pair:
Take profit – 1.075
Stop-loss – 1.063