Ella 
After a two-session pullback, the euro (EUR) has regained some stability, bouncing off last week’s lows around 1.0840 against the dollar, with an initial target at the key 1.0900 level. This positive start to the week for EUR/USD is in line with renewed selling pressure on the greenback, which led to a pullback in the US Dollar Index (DXY) from multi-day highs above 103.00 seen late last week.
Market participants are expected to closely monitor the ECB’s annual central bank forum in Sintra, Portugal, and a series of speeches from ECB officials including President Lagarde.
With regard to the ECB, investors still expect another 25 basis point hike in July, while the Fed is widely expected to follow suit based on recent comments and testimony from Fed Chairman Jerome Powell.
On the broader macroeconomic front, possible next steps by the Federal Reserve and the European Central Bank in normalizing monetary policy are the subject of ongoing debate, against a backdrop of mounting speculation on both sides of the Atlantic about an economic slowdown.
Speculators reduced their net long euro exposure to levels last seen in early April, around 1.446 million contracts, in the week to June 20, according to the latest CFTC positioning report, which included the ECB’s June 15 meeting. The meeting raised interest rates by 25 basis points.
EUR/USD remains under pressure and a breakdown of the June low of 1.0844 (June 23) could open the door for a potential test of the medium-term 100-day moving average at 1.0809. A failure of the latter would expose the May low of 1.0635 (May 31), followed by a deeper retracement of the March low of 1.0516 (March 15) and the 2023 low of 1.0481 (Jan 6).
If the bulls regain the upper hand, the next hurdle is expected to be the June high of 1.1012 (June 22), followed by the 2023 high of 1.1095 (April 26), followed by the 1.1100 round figure. Further gains would test the weekly top at 1.1184 (31 March 2022), which is supported by the 200-week moving average at 1.1181, which is close to the 1.1200 integer psychological mark.
As long as EUR/USD trades above the key 200-day moving average, today at 1.0567, the constructive view on EUR/USD appears unchanged.
