The ECB has seen a series of hawkish comments from ECB board members over the last couple of weeks.

It seems that Christine Lagarde now has the memo as on Monday this week she outlined that the ECB will be hiking by 25 bps in July and September. This sent the EUR racing higher. Furthermore, the USD may be close to peak bullishness and the CORE PCE data print on Friday could send the USD lower and launch the EURUSD even higher into month-end. The German bund and the US bond yield spread is also moving higher indicating that the EURUSD pair has more upside potential.

The seasonals also favour more EURUSD upside

Over the last 10 years, the EURUSD pair has only lost value once between May 27 and June 06. The largest gain was 1.56% in 2015. Are there more gains to come again this year on expectations of ECB rate hikes ahead?

Major Trade Risks:

  • Any significant news that changes the monetary policy outlook for the ECB or the Fed.
  • Any strong risk-off trading that results in USD strength.

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