The EURUSD moved sharply higher last week after the ECB pivoted toward the potential for a tightening in 2022. Lagarde did not rule it out during her press conference on Thursday, and since then, ECB officials have been laying out their timetable.
On Friday, ECB's Villeroy said that tapering will come before liftoff. ECBs Kazak said today that a July rate hike would imply extremely quick, unlikely pace of tapering. ECBs Knot sees first interest rate hike in Q4 2022. Ok, that is a timeline of events at least for now. The market may be thinking a little quicker however. It will be data dependent.
Technically, the price shot up on Thursday, and moved back above its 100 day MA (blue overlay line currently at 1.14252). The high on Friday reached 1.14832 which was just above the January highs of 1.14811 and 1.1482. That break of a pip or so, did not inspire the bulls into the weekend, and the price rotated back to the downside.
The modest corrective move did break back below the 100 day MA, but could not reach the 38.2% retracement of the move up from the Thursday low at 1.1400 (a nice round number too - the low reached 1.1411) . So the battle between the buyers and sellers was started.
Today, the price has once again dipped below the 100 day MA and once again, the move below stalled ahead of the 38.2% (the low today reached 1.14146). The price has moved back above the 100 day MA and trades just above it as I type at 1.1428.
Move back below, and traders will start to wonder if the third time is the charm and move down to test that 1.1400 level. Hold here, and the odds favor a run toward the triple top. This is the buyers shot to draw the line in the sand in the short term.
Looking at the daily chart, if the market wants to get excited about the EURUSD to the upside, there is room to roam in that direction. The break above the 100 day MA was the first since June 2021. The price is down from 1.23488 from the January 2021 high. The low in 2022, took out the low from 2021 ad 1.11853 but only for two trading days. However, getting above the 1.1482 area is required to give the buyers more comfort.
