The U.S. dollar strengthened slightly against main currencies. Expectations next week for interest rate hikes by the Federal Reserve System (Fed) declined. Currently, traders are considering about whether the end of the cycle of monetary policy tightening is close.
The U.S. consumer price report for May should be released on June 13. It will provide investors with more clarity about the state of health of the world's largest economy after recent mixed data and gentle remarks from Federal Reserve officials.
Traders estimated the probability of the Fed maintaining interest rates at the same level of 80.6%, according to CMEGroup's Fedwatch tool. However, according to them, the probability of a hike by 25 basis points in July is 51%.
High inflation remains the main problem in Europe. A survey by the European Central Bank showed that the expectations of buyers in the Eurozone for consumer prices declined. This became a relieving factor for politicians after the unexpected jump of inflation a month earlier.
The U.S. trade balance will be published today at 11:30 GMT. This macroeconomic indicator is the difference between exports and imports of goods and services for the reporting period in monetary terms. It is forecasted that the imported trade balance should fall to -75.2B from the previous value of -64.2B. If the figure will be worse than expected, then the U.S. dollar can greatly decrease its price.
European GDP data will be published on Thursday at 8:00 GMT. Gross Domestic Product is the total value of finished goods and services over a certain period of time. It is estimated that Gross Domestic Product should decrease by 0.1% to 1.2% year-over-year. The confirmation of the forecast may correct euro prices.
The EURUSD quotes went out of the downtrend on the H4 timeframe, which indicates a possible trend reversal.
In terms of wave analysis, the EURUSD price is in the formation of the second corrective wave on the H1 timeframe. The downward correction faced support at 1.0670. A pullback from the support could give a signal for the formation of the third ascending wave.
Signal:
The short-term prospects of the EURUSD pair are to buy.
The target is at the level of 1.0775.
Part of the profit should be fixed near the level of 1.0725.
The stop-loss is at the level of 1.0625.
Bullish trend has a short-term character, so the volume of trade should not exceed 2% of your balance.
This content is for informational purposes only and is not intended to be investing advice.
