The single currency booked another day of gains today, rising 0.4% to the highest level in a month and slowly advancing toward the 1.08 level.
EU macro news
Earlier today, according to the latest statistics from the European Commission, the Eurozone’s Final Consumer Confidence Index fell to -21.1 in May from -22.0 earlier. The results were in line with the consensus expectation of -21.1.
Furthermore, in May, the Business Climate Index fell to 1.26 from 1.59 in April. At the same time, the EU’s Economic Sentiment Indicator climbed to 105.0 in May, up from 104.9 projected and prior.
European Central Bank (ECB) Chief Economist Philip Lane said in an interview with Cinco Das, a Spanish business and finance journal that the central bank is dedicated to preventing financial instability.
According to Lane, in July and September, the ECB should lift interest rates by 25 basis points.
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Across the Atlantic, the US consumer confidence index, which will be released on Tuesday, will be another crucial indicator of economic morale, with investors keeping a careful eye on consumer resilience in the face of persistent recession concerns.
“Based on their earnings, along with other trends such as declining consumer confidence and real incomes, the consumer suddenly looked much more vulnerable,” Commonwealth Financial Network Chief Investment Officer Brad McMillan said in a note. “As goes the consumer, so goes the economy and ultimately the market.”
In China, Beijing and Shanghai have begun to relax their lockdown policies. The Premier has unveiled dozens of new measures targeted at bolstering the struggling economy, with more information soon.
Key resistance ahead
The EUR/USD pair is approaching the upper trend line of the descending channel. At the same time, previous lows are also converged there – roughly in the 1.08 area. Should the euro jump above that selling zone, it could be a massive buy signal, likely targeting 1.11 in the medium-term perspective.
On the other hand, if bears defend the 1.08 threshold, the euro could decelerate back to 1.0670. But for now, the immediate trend seems bullish as the USD has been retreating notably over the previous days, undermined by falling yields and overbought conditions.