EUR/USD trading points
- Possible exemption for the federal gas tax.
- Focus turns to Powell’s testimony tomorrow.
- Eurozone current account falls to its lowest level since May 2020.
Basic Euro Backup
President Joe Biden has announced that he may consider easing the federal gas tax hypertrophic pressure on the American consumer. This looser fiscal policy could help with a tight monetary policy stance and give the Federal Reserve more discretion and flexibility in its fight against inflation. In theory, loose fiscal policy attracts more foreign investment and thus increases the demand for it dollar. Combined with a hawkish central bank, this could give an extra boost to the dollar if the tax cut is approved.
This does not bode well for euro However, European Central Bank (ECB) President Christine Lagarde was able to allay concerns with her statement yesterday about her proactive fight against fragmentation. The eurozone current account release for April came at its lowest level since May 2020 at -5.4 B (see economic calendar below)but this has not been enough to upset the euro so far.
Later today, we look to the ECB’s McCaul and the Fed’s Barkin for further guidance ahead of tomorrow’s testimony from Fed Chair Jerome Powell.
EUR/USD economic calendar
source: DailyFX Economic Calendar
EUR/USD daily chart
The graph was prepared by Warren VenkitasIG
price movement On the The EUR/USD daily chart above shows a strong start to the European session for the bulls who are currently testing the 20-day EMA (purple) resistance level. While there is still room for more upside, the possibility of a push above trendline resistance (black) is unlikely.
- trend line resistance (black)
- 50 day moving average (blue)
- 20-day EMA (purple)
IG Customer Sense Data: Suddenly
IGCS shows offline retailers long on me EUR / USDwith 68% of traders who are currently holding long positions (as of this writing). At DailyFX, we usually take a conflicting view of crowd sentiment, but due to recent changes in long and short positions, we reach a short term bullish bias.
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