EUR/USD Price, Chart, and Analysis
- ECB de Guindos – APP program could end in July.
- ECB de Guindos – A rate hike in July is possible.
Comments from ECB Vice-President Luis de Guindos are behind the latest move in the Euro with EURUSD now breaking above 1.0900. In an interview with Bloomberg, Mr. de Guindos said that the central bank sees neither stagflation nor a recession happening in the Euro Area, that inflation will decline this year but stay above 4% in Q4, and that the APP bond-buying program will end in Q3. Echoing remarks made yesterday by the governor of the Central Bank of Latvia, Martins Kazaks, Mr. de Guindos added that he sees no reason why the APP program should not be discontinued in July and that, theoretically, a rate hike in the same month is possible.
EUR/USD Update – Popping Higher on Hawkish ECB Comments
This is the second bout of hawkish rhetoric from the ECB this week and financial markets are starting to sit up and take note. The latest market projections now see around 75 basis points of tightening (rate hikes) this year, up around 10-12 basis points this week, as the ECB continues its battle with runaway inflation. The final look at Euro Area inflation in March is released later today.
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EUR/USD is now trading at a one-week high and back 1.0900. The pair have been under pressure over the last months with any short-term rally seen as an opportunity to open a fresh short position. This may have changed now with the central bank releasing more specific guidance about ending the APP and starting rate hikes. The recent 1.0760 low may well hold in the coming months. In the short term, a cluster of prior highs around 1.0940 may stall the move higher before the pair eyes 1.1000 and higher.
EUR/USD Daily Price Chart – April 21, 2022
Retail trader data show 73.08% of traders are net-long with the ratio of traders long to short at 2.72 to 1. The number of traders net-long is 4.42% lower than yesterday and 2.05% higher from last week, while the number of traders net-short is 1.04% lower than yesterday and 2.80% lower from last week.
We typically take a contrarian view to crowd sentiment, and the fact traders are net-long suggests EUR/USD prices may continue to fall. Positioning is less net-long than yesterday but more net-long from last week. The combination of current sentiment and recent changes gives us a further mixed EUR/USD trading bias.
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