EUR/USD continues to sit in between both key hourly moving averages
The near-term bias in the pair is more neutral now as price holds below the 100-hour MA (red line) @ 1.1313 but above the 200-hour MA (blue line) @ 1.1278. There is also support from the near-term trendline that is helping to limit losses on the session so far, but overall I'd pay more attention to the 200-hour MA for clearer near-term direction.
Price action remains limited as the pair sits in just a 17 pips range as markets continue to digest global trade tensions, the odds of Fed rate cuts in the coming months, and also falling inflation expectations in the euro area.
In my view, the technical and positioning pictures are favouring the euro slightly if you look at where the single currency was trading in the weeks before against the dollar. However, price needs to clear resistance and offers around 1.1350 but more importantly the 200-day MA @ 1.1362 in order to establish more upside momentum.
However, fundamentals for the euro may still come back to haunt the currency with political risks in Italy constantly being highlighted and the fact that the market confidence towards the ECB is at an all-time low isn't helping.
Right now, market pricing still suggests that the Fed will be the "more dovish" of the two central banks in the sense that they will move to cut rate first. Fed fund futures have a ~85% probability of a cut in July for now but if the ECB begins to step up their dovish game, I reckon there's scope for EUR/USD to weaken slightly.
This is because markets are already almost close to fully pricing in a dovish Fed while a more dovish ECB is not quite on the agenda just yet. That said, there's a lot that could still get in the way and mess up all the pricing here with global trade tensions and economic data the two major things to keep an eye on.
As such, the next key risk event this week will be tomorrow's US retail sales report so let's see what that has to offer then.