. Dollar Edges Lower; Euro Gains Ahead of ECB Meeting

Dollar Edges Lower; Euro Gains Ahead of ECB Meeting

21 Jul 2022

EUR/USD is trading up 0.13% at 1.0190

The U.S. dollar edged lower while the euro bounced in early European trade Thursday, with risk sentiment boosted by the resumption of Russian gas flows to Western Europe although the upcoming European Central Bank meeting prompted some caution.

At 3:20 AM ET (0720 GMT), the Dollar Index, which tracks the greenback against a basket of six other currencies, traded 0.2% lower to 106.763.

EUR/USD rose 0.3% to 1.0211, not far off Wednesday’s intraday peak of 1.0273, the highest since July 6.

The single currency has been boosted by the news that Russia restarted earlier Thursday sending gas through its biggest pipeline to Europe after a 10-day maintenance period.

Restoring flows to the levels requested will take some time, according to a spokesperson for Nord Stream, but the fact that Russia hasn’t chosen to make a political point by halting the flows for longer will provide some relief for the continent that still relies heavily on Moscow for its energy.

That said, there remains a degree of caution within the markets ahead of the latest European Central Bank meeting, at which the policymakers are expected to deliver their first hike since 2011.

ECB President Christine Lagarde previously telegraphed a 25 bps increase for this meeting, but press reports earlier this week suggested the policymakers would discuss a half-point rise to try to curb soaring inflation, which was confirmed at an annual 8.6% in June earlier this week, despite the risks of a recession.

On technical fronts EUR/USD RSI stood at 42.76 and currently it is trading below 20 and 50 days MA & above 5 days MA. So, SELL position can be taken with following target and stoploss:

TRADE SIGNAL – : EUR/USD – SELL: 1.0189, TARGET: 1.0116, STOP LOSS : 1.0266