Trade of The Day – EUR/GBP
Facts:
- The price is near the lower boundary of a consolidation range between 0.886 and 0.861.
- Upward corrections within the consolidation are breaking to increasingly lower levels, while at the same time testing resistance around 0.863.
- The EMA100 has crossed the EMA200 from above.
Recommendation:
Short position (Sell) on EURGBP at the market price.
- Target price (Take Profit; TP): 0.8400
- Stop Loss (SL): 0.8817
EURGBP (D1)
Source: xStation5
OPINION :
The EURGBP rate is once again testing the lower boundary of the consolidation, which can also be treated as a developing 1:1 pattern, potentially ending with a downside breakout. The repeated defense of the ~0.86 level indicates the strength of this zone; however, increasingly weaker upward corrections within the consolidation reveal buyer weakness and point to the likely direction of further price movement.
Methodology and assumptions:
- The recommendation is based on technical analysis of the chart, in particular EMA moving averages and Fibonacci levels.
- The target level was determined based on Fibonacci levels.
- The protective stop-loss order was set based on a favorable risk-to-reward ratio and with reference to a Fibonacci level.
Euro climbs above 1.1600 on US–Iran peace breakthrough
- EUR/USD edges higher to around 1.1610 in Monday’s early European session.
- The US and Iran announced a framework deal for peace.
- ECB’s Nagel said the central bank is ready to hike again in July if necessary.
The EUR/USD pair gains traction to near 1.1610 during the early European trading hours on Monday. The reports that the US and Iran have reached a deal to reopen the Strait of Hormuz improved risk sentiment, supporting the Euro (EUR) against the US Dollar (USD). The US Federal Reserve (Fed) interest rate decision will be in the spotlight later on Wednesday.
Washington and Tehran have announced a framework deal for peace, which will be signed in Switzerland on Friday. US President Donald Trump said the US is lifting its naval blockade on Iranian ports and that the Strait of Hormuz will reopen after the agreement is signed.
The Fed is widely expected to keep its benchmark interest rate unchanged at a target range of 3.50% to 3.75% at its upcoming policy meeting on Wednesday. Traders will closely monitor the press conference and take more cues about how new Fed chair Kevin Warsh will lead the US central bank into its next era. Any hawkish remarks from Fed officials could lift the Greenback and act as a headwind for the major pair.
Last week, the European Central Bank (ECB) hiked its key interest rates, saying “the war in the Middle East is generating inflation pressures.” This marks the first rate increase since September 2023, after seven consecutive meetings where interest rates were kept on hold.
ECB Governing Council member Joachim Nagel said on Friday that the central bank is prepared to raise interest rates for a second straight meeting in July, if the shock from the war in the Middle East requires it.
Euro: Seen drifting toward 1.1400 against US Dollar – BBH
Brown Brothers Harriman’s Elias Haddad reports that EUR/USD briefly dipped toward 1.1500 after the ECB decision before rebounding on the US-Iran breakthrough. Haddad expects EUR/USD to edge lower and stabilize closer to 1.1400 as US growth outperforms the Eurozone. The ECB’s 25 bps hike and hawkish inflation stance are seen cushioning, but not reversing, Euro downside.
Euro pressured by weaker growth outlook
“EUR/USD dipped towards 1.1500 following yesterday’s ECB policy decision before rebounding to a high of 1.1590 driven by the positive US-Iran breakthrough. We expect EUR/USD to edge lower and stabilize closer to 1.1400, reflecting a stronger US growth outlook relative to the Eurozone. ECB rate hikes in a sluggish growth, high inflation environment, is not bullish for EUR but should help cushion the downside”
“As was widely expected, the ECB raised the policy rate 25
Euro steadies against British Pound following UK GDP, German HICP inflation data
- EUR/GBP remains subdued following the release of data from the UK and Germany.
- UK GDP contracted by 0.1% month-on-month in April, meeting market forecasts after a 0.3% expansion in March.
- German May HICP inflation met forecasts, landing at 2.7% year-on-year.
EUR/GBP inches lower after two days of gains, trading around 0.8630 during the Asian hours on Friday. The currency cross remains subdued following the release of economic data from the United Kingdom (UK) and Germany.
The UK Gross Domestic Product (GDP) contracted by 0.1% MoM in April, following a 0.3% rise reported in March. The market forecast was for a 0.1% decline in the same period. Meanwhile, the Index of Services (April) rose 0.8% 3M/3M versus March’s 0.8%. Meanwhile, monthly Industrial Production came in at 0% MoM in April, while Manufacturing Production increased by 0.4% during the same period.
Money markets are currently pricing in at least a 25-basis-point interest rate hike by the Bank of England (BoE) this coming September, with a strong probability of a second increase before the end of the year. This potential tightening comes amid broader economic challenges, as political uncertainty surrounding the leadership of the Labour Party continues to weigh on investor sentiment and compound the current downturn.
Over in the Eurozone, inflation data met forecasts as Germany’s revised Harmonized Index of Consumer Prices (HICP) for May landed at 2.7% year-on-year. On a monthly basis, HICP growth experienced a slight contraction of 0.1%.
The European Central Bank (ECB) took aggressive action on Thursday by raising interest rates for the first time in nearly three years. The central bank also signaled a prolonged hawkish stance, indicating that restrictive monetary policy will likely remain firmly in place through 2027.
Euro: Complex rate path questions for EUR – Commerzbank
Commerzbank’s Thu Lan Nguyen notes the European Central Bank sounded slightly hawkish, but investors already price in two further hikes, leaving the Euro softer after President Lagarde avoided clear guidance. Nguyen argues whether hikes come in July or later still matters, as an earlier move would signal urgency, yet markets may see rapid tightening as a policy mistake and price in future cuts, limiting Euro support.
ECB timing debate clouds Euro outlook
“Basically, things turned out just as my colleague Michael had predicted in the morning: in our view the ECB sounded slightly hawkish yesterday. But that was not enough to lure investors out of hiding who are already pricing in two further rate hikes by the end of the year anyway. Accordingly, the euro ultimately edged slightly lower, as President Lagarde avoided sending a clear signal in favour of further rate hikes.”
“This was probably not the main reason for the upward move in EUR/USD over the course of yesterday’s trading – the decisive factor here was US President Trump’s statement that he had called off another military strike against Iran because a deal was virtually in the bag. However, it is likely to have contributed to positive euro sentiment. After all, the discussion shows that a rate hike in July is at least on the table.”
“One might argue: whether the next two rate hikes expected by the market take place in July and September, or in September and December, hardly makes a big difference and is therefore irrelevant for the euro. But it is not quite that simple. A second rate hike as early as July would suggest a certain urgency behind the tightening and would therefore have a somewhat hawkish flavour.”
“If the market shares this view, it is likely to price in a rapid correction in rates downwards at the long end, which would dilute – if not completely negate – the positive effect of the rate hike for the euro. So: the debate about the timing of the next rate hike is by no means irrelevant. The situation is more complex than it appears at first glance
Germany’s final Harmonized Index of Consumer Prices for May remains at 2.7% YoY: What it means for EUR/USD?
Germany’s final Harmonized Index of Consumer Prices (HICP) data for May has arrived at 2.7% Year-on-Year (YoY), as the preliminary data showed. The inflation data cooled down from 2.9% in April. On a monthly basis, it is confirmed that the German HICP growth declined by 0.1%.
There is a slight recovery move in the EUR/USD data, following the German final HICP data release; however, it appears that the move has come due to a slight correction in the US Dollar (USD). Still, the major currency pair is down 0.15% to near 1.1560.
Euro Price Today
The table below shows the percentage change of Euro (EUR) against listed major currencies today. Euro was the weakest against the US Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.10% | 0.06% | 0.19% | 0.06% | 0.20% | 0.29% | 0.13% | |
| EUR | -0.10% | -0.05% | 0.09% | -0.04% | 0.11% | 0.19% | 0.02% | |
| GBP | -0.06% | 0.05% | 0.15% | 0.01% | 0.12% | 0.23% | 0.08% | |
| JPY | -0.19% | -0.09% | -0.15% | -0.15% | -0.01% | 0.08% | -0.08% | |
| CAD | -0.06% | 0.04% | -0.01% | 0.15% | 0.14% | 0.22% | 0.07% | |
| AUD | -0.20% | -0.11% | -0.12% | 0.01% | -0.14% | 0.07% | -0.08% | |
| NZD | -0.29% | -0.19% | -0.23% | -0.08% | -0.22% | -0.07% | -0.14% | |
| CHF | -0.13% | -0.02% | -0.08% | 0.08% | -0.07% | 0.08% | 0.14% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Euro from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent EUR (base)/USD (quote).
What do Germany’s final HICP data mean for EUR/USD?
The impact of Germany’s final HICP data remains little on EUR/USD, unless there is a dramatic deviation. The major trigger for the major currency pair remains preliminary readings.
Meanwhile, the European Central Bank’s (ECB) monetary policy announcement on Thursday, in which it raised the Deposit Facility rate by 25 basis points (bps) to 2.25%, signaled that policymakers remained highly concerned about upside inflation risks due to elevated energy prices in the wake of Middle East conflicts.
ECB President Christine Lagarde said in the press conference, post the monetary policy announcement, “Short-term inflation expectations have risen,” and the central bank will “monitor size, persistence of energy price increase”.
Technical Analysis:
EUR/USD trades lower at around 1.1560, keeping a bearish bias as spot holds beneath the 20-period Exponential Moving Average (EMA) at 1.1603 and the broader downtrend resistance line near 1.1687. The pair is still riding an underlying ascending support structure from 1.1503, but the latest Relative Strength Index (14) reading around 42 suggests sellers retain the near-term initiative while any rebounds are likely to struggle against overhead supply.
On the topside, initial resistance is located at the 20-period EMA around 1.1603, with the descending trend-line resistance at 1.1687 acting as the next barrier if buyers manage a clearer bounce. On the downside, the first key support emerges at the rising trend-line break level near 1.1503; a daily close below this floor would expose it to the March 13 low at 1.1411.
EUR/JPY Price – Strengthens above 185.00, while bullish trend eyes consolidation
- EUR/JPY gains ground to around 185.20 in Wednesday’s early European session.
- Likelihood of hawkish stance hikes from the ECB supports the Euro.
- The cross keeps the bullish vibe, but consolidation cannot be ruled out in near term with neutral RSI momentum.
- The first upside barrier emerges at 186.05; the initial support level is located at 185.15.
The EUR/JPY cross gathers strength to near 185.20 during the early European session on Wednesday. The Euro (EUR) edges higher against the Japanese Yen (JPY) amid expectations that the European Central Bank (ECB) would raise rates at its June policy meeting on Thursday.
The ECB is set to raise its key interest rate for the first time in almost three years on Thursday, becoming the first of its peers to tighten policy in response to a jump in energy prices caused by the conflict in the Middle East. While money markets are already pricing in a second 25 basis points (bps) hike for September, economists expect the ECB to maintain a “gently hawkish” but highly data-dependent tone without pre-committing to a fixed path.
“Lagarde may provide some indication of the ECB’s next move after she muddled communication on the rate outlook in March. We expect her to be clearer than in the past that a second hike may be in the pipeline,” said Simona Delle Chiaie, chief euro-area economist at Bloomberg. Any hawkish comments from ECB policymakers could lift the EUR against the JPY in the near term.
Technical Analysis:
In the daily chart, EUR/JPY holds a constructive near-term bias as it consolidates just above the Bollinger middle band and remains comfortably over the 100-day simple moving average, suggesting underlying demand on dips. The Relative Strength Index (14) at 49.99 is effectively neutral, hinting at a pause rather than exhaustion after the recent grind higher.
On the topside, the immediate hurdle is the Bollinger upper band near 186.05, where fresh selling interest could emerge. The next hurdle is seen at the February 9 high of 186.24, en route to the January 23 high of 186.88. On the downside, initial support is seen at the Bollinger middle band around 185.15, ahead of the 100-day SMA at 184.50, while a deeper pullback towards the lower Bollinger band near 184.25 would be expected to attract buyers as long as the broader bullish structure is preserved.
