EUR/USD is trapped in the 1.0500-1.0640 as Fed speakers lay the ground for 50-bps rate hikes

• On Tuesday, the EUR/USD loses some 0.18% in the North American session.
• ECB’s Nagel: The ECB needs to hike rates in July if data shows it's needed.
• Fed rate-setters lay the ground for 50-bps increases as the Fed eyes CPI on Wednesday.
• EUR/USD Price Forecast: The major is neutral-downward biased, though it remains range-bound.

The shared currency continues to be unable to recover above the 1.0600 thresholds and remains trapped in the 1.0500s area for the third consecutive trading session. At 1.0538, the EUR/USD reflects the aforementioned amidst a mixed sentiment in the financial markets, portrayed by European equities rising while US stocks fluctuate.

Factors like the Fed tightening monetary policy, which threatens to “miss” a soft landing and spur a recession, alongside China’s zero-tolerance coronavirus restrictions, and the Ukraine-Russia war, loom the economic outlook.

Early in the week, reports from China showed that export growth slowed to its weakest in almost two years as Beijing’s Covid-19 restrictions halted factory production and crimped domestic demand. Also, the conflict between Ukraine – Russia seems to be at a dead end, with no advancement in hostilities and peace talks, as Russian President Vladimir Putin is preparing for a prolonged conflict, according to the Financial Times.

ECB’s Nagel insists on rate hikes as Fed rate-setters lay the ground for 50-bps increases

Aside from this, central bank speaking dominates the headlines on both sides of the Atlantic. In the European session, following a better than expected German ZEW, Economic sentiment in May, ECB member Joachim Nagel said that the bank should hike rates in July if incoming data suggests that inflation is too high. Meanwhile, ECB Francois Villeroy stated that the ECB would act to ensure price stability and reiterated that governments must tackle debt as rates rise.

Across the pond, Fed policymakers lay the ground for a series of three 50-bps increases, counting the May meeting, as expressed by New York Fed President John Williams, Richmond’s Fed Barkin, and Cleveland’s Fed Loretta Mester. The latter added that if inflation does not get under control, the Fed would need to go beyond neutral, and added that the board would not rule out 75-bps hikes, forever.

Elsewhere, the US economic docket would feature additional Fed speakers, with Neil Kashkari and Christopher Waller crossing the wires. Data-wise, US inflation figures will be unveiled on Wednesday, followed by prices paid by producers on Thursday and Consumer Sentiment on Friday.

EUR/USD Price Forecast: Technical outlook

The EUR/USD remains neutral-downward biased, unable to break beyond the 1.0500-1.0640 area boundaries. Even though the MACD-line is about to cross over the signal line, a leg-up would be capped by a confluence of resistance levels lying around 1.0600-40 area.

Upwards, the EUR/USD first resistance would be the 1.0600 figure. Break above would expose the 1.0640, top of the range above-mentioned, followed by a downslope trendline that passes near 1.0660-70. On the downside, the EUR/USD first support would be 1.0500. Latter’s breach would expose April’s 28 daily low at 1.0471, followed by January’s 2017 cycle lows at around 1.0340.