Euro struggles to find direction, above 1.0900 as investors digest ECB

• Euro advances to fresh multi-week highs near 1.0960.
• European stock markets open little changed.
• Risk appetite looks slightly favored on Friday.
• J. Nagel and B. Vasle, from the ECB, advocate an additional rise in the summer.
• The final eurozone inflation rate will be released later in the day.
• In the US, preliminary consumer sentiment will be released and there are also Fed speeches later in the session.

The common currency (EUR) appears to be struggling to continue its strong weekly recovery and prompts the EUR/USD pull back from multi-week highs near 1.0960 during the European session on Friday, and area last visited in mid-May.

Meanwhile, risk appetite trends appear somewhat split as investors continue to adapting to hawkish ECB message on Thursdayafter the central bank followed through on its promise and raised rates by 25 basis points and signaled that there will be more hikes at the July meeting.

In this regard, Joachim Nagel and Bostjan Vaslemembers of the Executive Board of the ECB, advocated early in the European morning for a rise in rates of 25 basis points more in summera view that coincides with comments by President Christine Lagarde on Thursday.

At the ECB press conference, President Lagarde spent a lot of time highlighting the factors that are contributing to rising inflation, such as strong wage increases, improving profit margins and high inflation expectations. Although potential risks to economic growth and tightening of financial conditions were acknowledged, the main message conveyed by the ECB was its commitment to maintain the upward trajectory of interest rates. As Lagarde mentioned, the ECB has no intention of considering a pause at the moment.

The national calendar will include the final Eurozone inflation figures for May, while Michigan’s preliminary consumer sentiment gauge will be the most prominent release across the Atlantic, along with remarks by James Bullard, of the St. Louis Fed, and Christopher Waller of the FOMC.

Daily summary of the markets movement: The Euro seems to have found the initial hurdle near 1.0960

• The US dollar attempts a tepid rebound and leads the DXY Dollar Index to move a bit away from multi-week lows near 102.00.
• US and German yields rebound, while the inversion of the curve continues to signal the likelihood of a recession in the coming months.
• It seems that the continuation of the dollar’s slide is not certain after the FOMC meeting on Wednesday, since the Committee plans to resume raising interest rates, possibly as early as July, and Jerome Powell clarified that the decision not to raising rates at the current meeting was not a “jump”.
• Final eurozone inflation figures, to be released later in the session, are expected to confirm gradual disinflation.
• Consensus expects US consumer sentiment to improve slightly in June, while a resumption of the hawkish narrative should not be ruled out when C. Waller speaks later in the session.

Technical Analysis: EUR/USD faces a key hurdle at 1.1000

EUR/USD set a new monthly high in 1.0962 on June 16. If the pair continues to rise, you will need to quickly break through this level in order to reach the psychological barrier of 1,1000. Above that level, the pair could challenge the 2023 high in 1.1095 (April 26), closely followed by the round level of 1.1100 and ahead of the maximum 1.1184 (March 31, 2022). Furthermore, the latter seems propped up by the proximity of the 200-week SMA, today at 1.1182.

Should the bears regain control, there are no significant support levels until the May low in 1.0635 (may 31). A break of this level could lead to a deeper decline to the March low in 1.0516 (March 15), followed by the 2023 low in 1.0481 (January 6th).