Foreign exchange market update: EUR/USD 1.0000 or not?

Foreign exchange market: EUR/USD level
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EUR/USD 1.0000 or maybe not?

The foreign exchange market is torn, where is the EUR/USD exchange rate going? Just when nobody was expecting it anymore, the EUR was able to get some breathing space and has not fallen below the important level of EUR/USD 1.0350.

The currency watchdogs in Europe made a corresponding contribution. The bond-buying program of the European Central Bank (ECB) could expire as early as June, paving the way for a rate hike in July. Due to the galloping inflation, those voices that can even imagine a rate hike of 50 basis points are getting louder. Just a few months ago this was considered an unrealistic scenario.

In contrast to the US central bank, the ECB has only one mandate: price stability with an inflation rate of around 2%. Not only rising prices but also the strong USD (inflation is imported through a strong USD) are currently causing prices to explode. It is still too early to make any forecasts regarding further interest rate policies, but there are indications of a turnaround in interest rates in Europe.

Forming a bottom at 1.0350

From a chart technical point of view, EUR/USD did not fall below the low from 2016/2017. This well could be a sign that the market is trying to form a bottom at this level. This can eventually help the EUR to attract further buying in the coming months.

Support 1.0640
Support 1.0350

Resistance 1.0840
Resistance 1.1000

The chart below shows the lows from 2016/17 and 2022 in EUR/USD:

FX market update: EUR/USD level
Source: TradingView

An unexpected turnaround in interest rates in Europe, oil prices and inflation at record levels and a never-ending dispute in Ukraine – these are currently the most important factors for the next few weeks. If there are any signs of serious changes in these three areas, it may catapult the EUR/USD decisively in one direction or the other.

For more information on the foreign exchange market update, please feel free to contact our forex experts! You can also check our live currency market overview.

Please note that this elaboration was completed on 01/06/2022 13:54 CET.
This article is for informational purposes only and does not take into account the particular circumstances of the readers. It does not constitute financial advice. The content of this article is not intended as an offer or solicitation to buy or sell any fx or to take any other action and are not intended to form the basis or part of any contract. Clients should seek independent professional advice and draw their own conclusions with respect to the suitability of the transaction, including its economic merits and risks.The information contained in this article is public data and has been obtained from sources believed by amnis to be reliable and accurate. Amnis Treasury Services AG makes no warranty or representation as to its correctness, accuracy or completeness for a particular purpose. Neither Amnis Treasury Services AG nor any of its employees shall be liable for any damages whatsoever arising out of the use of this article, its contents or otherwise.

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Gerhard Scharinger
Gerhard Scharinger is the Head Markets of amnis. He is an expert in Foreign Exchange, Treasury Management, Economics and Hedging. Besides various published articles and foreign exchange news he is also an international speaker at different events. Follow him and amnis on LinkedIn, Twitter and Facebook to keep up with the latest industry news and insights.
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