Market Analysis: Euro Maintains Bid Bias

Amidst a mild risk-on mood, the Euro remains bid in the 1.1000 zone, demonstrating resilience despite ongoing global economic uncertainties. The currency has sustained its upward momentum, trading near monthly highs against the US Dollar, indicating underlying strength in the Eurozone.

US Dollar Challenges Key Support Level as Powell’s Testimony Looms

The US Dollar Index (DXY) faces a critical test as it challenges monthly lows around the 102.00 mark. Investors closely monitor Federal Reserve Chair Jerome Powell’s second testimony, which is expected to maintain a hawkish tone. Powell has hinted at the necessity for further measures to address inflation and hasn’t ruled out the possibility of tightening policies in the latter half of the year.

Uncertainty surrounding China’s economic recovery continues to weigh on investor sentiment. The intensification of the weekly pullback in European equities reflects growing recession worries within the market analysis. As central banks globally consider tightening policies, concerns about the overall economic outlook add to the prevailing market jitters.

Market Focus Shifts to US Economic Calendar, Powell Testimony

With limited significant releases in Europe, attention turns to the US economic calendar. Critical data such as Initial Jobless Claims, the Chicago Fed National Activity Index, CB Leading Index, and Existing Home Sales figures will shape market dynamics. Additionally, market participants will closely follow speeches by Federal Open Market Committee (FOMC) members to gain insights into the future direction of US monetary policy.

EUR/USD exhibits a notable rebound, reaching fresh weekly highs. The currency pair is likely to retest the psychological barrier of 1.1000, paving the way for a potential challenge of the 2023 high at 1.1095, the round level of 1.1100, and the weekly high of 1.1184. The 200-week SMA provides support at 1.1181, reinforcing the bullish outlook for the Euro.

Market Analysis: GBP Weakens Ahead of Bank of England Meeting Amid Rate Hike Expectations

GBP experiences its fourth consecutive day of losses as market participants anticipate the Bank of England’s interest rate decision. At the moment, a 25 basis point hike to 4.75% is widely expected. Besides, the possibility of a larger 50 basis point adjustment to 5% is now back on the table. However, some unexpected inflation data may occur. Rising inflation, especially in core inflation, suggests that the peak is yet to be reached, leading to speculation of more aggressive rate hikes.

Looking ahead, market attention shifts to Eurozone consumer confidence data, expected to show a modest improvement from -17.4 to -17. This data will shed light on consumer sentiment within the Eurozone and its potential impact on the overall economic landscape.