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Euro quotes are supported by expectations of the beginning of the cycle of tightening the monetary policy of the European Central Bank and the increase in its interest rate.
“It is likely that we (at the ECB) will be able to put negative rates behind us by the end of the third quarter,” Lagarde said the week before last, also confirming that the APP program (an emergency quantitative easing program) will end at the very beginning of the third quarter, and “if inflation stabilizes at around 2% over the medium term, a gradual further normalization towards a neutral rate would be appropriate. The ECB will take all necessary steps to this end.” At a June 9 meeting, ECB leaders decided to keep their base deposit rate at -0.50%, but said they intended to raise interest rates by 25bp. at the July meeting following the completion of the Asset Purchase Program (APP) on July 1.
Regarding the dynamics of the euro this week, it is also worth paying attention to the publication on Thursday (at 07:30 and 08:00 GMT) of indexes (PMI) of business activity in the manufacturing sector in Germany and the Eurozone. This index is an important indicator of the state of the entire European economy. A result above 50 is considered positive and strengthens the EUR, below 50 is considered negative for the euro. Previous PMI values for the manufacturing sector of the Eurozone: 54.8, 55.8, 54.9, 55.5, 52.3, 53.3, 55.4, 54.2, 56.2, 59.0. June forecast: 54.0.
As for the EUR/USD pair, despite today's growth, it still remains under pressure. The breakdown of the local support level 1.0485 will return the downside risks to 1.0300, and further towards the parity of the euro with the dollar against the backdrop of a steady strengthening of the dollar and a deterioration in the prospects for the Eurozone
Support levels: 1.0500, 1.0485, 1.0400, 1.0355, 1.0300, 1.0200, 1.0100, 1.0000
Resistance levels: 1.0616, 1.0670, 1.0780, 1.0800, 1.0810, 1.0955, 1.1000, 1.1085
Trading Recommendations
Sell Stop 1.0470. Stop Loss 1.0610. Take-Profit 1.0400, 1.0355, 1.0300, 1.0200, 1.0100, 1.0000
Buy Stop 1.0610. Stop Loss 1.0470. Take-Profit 1.0670, 1.0780, 1.0800, 1.0810, 1.0955, 1.1000, 1.1085
