Trading opportunities for EUR/USD | 19 April 2024

EURUSD:

The EUR/USD continues to decline, currently trading around 1.0640. After retreating from weekly highs of 1.0690 on Friday during the early Asian session, the currency is now facing further pressure. Aggressive comments from Federal Reserve (Fed) officials have provided some support for the US Dollar (USD).

On Thursday, the number of US citizens filing new applications for unemployment benefits increased by 212k for the week ended 13 April, up from the previous weekly increase of 212k (revised from 211k). This figure was below the market consensus forecast of 215k, according to the US Department of Labour. The report showed that the labour market remains resilient and investors expect that the US Federal Reserve may delay interest rate cuts until September.

On Tuesday, Federal Reserve Chairman Jerome Powell stated that monetary policy should be tighter due to the continued upward trend in inflation during the first three months of the year. On Thursday, Atlanta Fed President Rafael Bostic indicated that U.S. inflation is expected to return to the 2% target at a slower pace than previously anticipated. Bostic also expressed his willingness to exercise patience and a rate cut is likely before the end of the year. Meanwhile, New York Fed President John Williams stated that he did not believe there was a need to cut rates and that monetary policy was in a strong position. Strong economic data from the US, as well as the theory of a US rate hike, continue to boost the USD and act as a headwind for EUR/USD.

Across the pond, the European Central Bank (ECB) has signalled that it may start cutting interest rates in June. On Thursday, ECB Vice President Luis de Guindos stated that the central bank would be willing to relax its monetary policy if data develops as expected. ECB policymaker François Villeroy de Galhau emphasized that the ECB should cut interest rates in June to avoid falling behind the inflation curve.

Elsewhere, ECB policymaker Joachim Nagel indicated that a rate cut in June is becoming increasingly likely, although some inflation data remains above expectations. Growing speculation that the ECB will start cutting interest rates sooner than the US Fed is putting pressure on the euro (EUR) and limiting EUR/USD gains for the time being.

Trading recommendation: If the price consolidates below 1.0610, we start selling. In case of overcoming the mark 1.0690 - buy.

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