Not Our Favorite Trading Day

And in the end, we got a bearish breakout in the EUR/USD, even though the European Central Bank outlined a slightly more aggressive path than previously expected. The ECB committed to a 25bp hike in July and signaled a bigger hike in the fall. Thus, policy makers have left open the possibility of a historical 50bp hike in September and October. However, despite the hawkish message, the ECB seems to be far behind the inflation fight, raising the risk of a recession in the EU on the back of persistent and dangerous inflation. Looking at the DAX which dropped towards 14000 following the ECB decision, the euro’s struggle may seem only natural.

As for our signals, we had to go on a loss-making roller coaster ride before we saw some green pips in the very end.

Traders will pay particular attention to the U.S. inflation data today at 12:30 UTC. A higher reading could spur safe haven flows, which could be slightly positive for the U.S. dollar.

We wish you a nice weekend.

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