Fundamental Overview

Major upcoming events

inflation data for the euro area :

Regarding the base effect of june 2019 CPI year over year that was relatively high at 1,3%, it is difficult for june 2020 euro area CPI data to come any where closer , so we expect a continuous muted inflation at around 0,00% or even a bit negative.

This may move the pair to the downside in the short run, in response to negative data and sentiment, and expecting that more easing from the ECB is needed to bring inflation back.

However, in the mid term, and on a comparative basis to the U.S Dollar. This means less inflation in the Euro zone compared to the United States, with a CPI differential of -0,15% in May, and the negative spread may widen in June.

From a macroeconomic perspective, a negative inflation differential means more expansive Euro compared to the U.S Dollar.

FOMC members to speak:

FED chair POWEL to testify, along with Treasury Secretary Steven Mnuchin, before the House Financial Services Committee. And other FOMC members to speak this week.

the more likely scenario of most of the coming speeches is an optimistic tone from the FOMC members claiming half way voctory , and that most bad data have ended by the end of the second Quarter , and it is now time to help sustain the economy in its recovery phase through using all the available monetary policy tools to reach the mandatory goals of maximum employment and price stability (inflation) near 2% .

Technical analysis

From the big picture, the EUR USD on monthly chart is following a very long term persistent down trend, and is now landing at a strong Fibonacci retracement level of 61,8% and near the long term trend line.

This is a highly critical situation for the EUR USD, that may indicate either a bottoming till the upward breakout of both critical levels (61,8% Fib, and the long term trend line), or a pull back below the 61,8% Fib and a continuation of a down trend, making by then the EUR USD parity theory a strong case.

In the short term we still keep a short Bias for the EUR/USD pair that is likely to retest the previous low of june 19th at 1.1170.

A close below that level on a daily time frame accompanied with relatively high momentum opens the door for more selling opportunity.

our short term stop loss signal is a daily close above 1,1250,