The Euro climbed in early trading on Monday after the ECB’s President Christine Lagarde announce med that “July is the likely lift-off date for ECB rates”. Recent concerns by ECB officials around Euro stability have added to EUR strength because a weaker Euro can exacerbate the already rampant inflation.
Money markets are becoming increasingly hawkish in their pricing of ECB rate hikes which is up almost 10bps to 105bps for 2022 since last week (see table below):
EUR/USD price action now looks to retest the 1.0600 psychological level since early May. I will be looking for a definitive candle close above this level before looking at additional Euro gains. We must remember that the Eurozone is in a poor growth environment and could be aggravated by the Russia/Ukraine war along with the proposed Russian oil embargo. The bearish trend could easily return but for now we are seeing some respite for the Euro however I do favor dollar strength over the Euro medium/long-term.