FLOW SUMMARY

The overall market environment, characterized by a VIX at 16.59, indicates a risk-on appetite that tends to weigh on the US dollar as a safe haven. This trend is confirmed by the weakness of the Dollar Index (DXY), which is trading below 99.10. The main catalyst for the EUR/USD is, however, the change in narrative regarding the monetary policy differential. While the Fed/ECB divergence was the driver of the decline, recent hawkish comments from Isabel Schnabel (ECB) suggest a possible rate hike as early as June, which could initiate a narrowing of the US-EU rate spread. The aggregation of these flows generates a bias that, although structurally fragile, becomes tactically positive for the euro.

TECHNICAL AND VOLUMETRIC STRUCTURE

The EUR/USD pair is trading below its 20 and 200-day moving averages (1.1690 and 1.1681 respectively), which confirms a fundamental trend that remains BEARISH. However, momentum, measured by the RSI(14) at 39.63, is not in oversold territory and leaves significant room for upside. The price structure shows consolidation above the monthly support at 1.1577. A break and hold above the immediate resistance zone at 1.1650 would be a first signal of reversal, opening the way towards the confluence of moving averages around 1.1690.

SCENARIOS & CATALYSTS

  • BULLISH Scenario (58%): The hawkish comments from the ECB are followed by other members, confirming a change of course. The DXY continues its decline under the effect of risk-on sentiment. The pair breaks the resistance of 1.1690 and heads towards the monthly resistance at 1.1850.

  • NEUTRAL Scenario (25%): The market interprets the comments as a mere trial balloon. The pair remains contained between the support at 1.1577 and the resistance of the moving averages around 1.1690, awaiting a stronger catalyst (next ECB meeting, US inflation figures).

  • BEARISH Scenario (17%): The thesis of the structural weakness of the European economy, particularly in the face of the energy crisis, regains the upper hand. The ECB's rhetoric is moderate, and the dollar rebounds. The pair breaks the support of 1.1577 and targets the 6-month low at 1.1415.

AEGIS VERDICT

In a BULL market regime (SPY > MA50), this BULLISH signal on the EUR/USD constitutes a tactical thesis reversal, triggered by a notable change in tone from the ECB. This new information invalidates the main catalyst of our previous BEARISH position, which was based on a divergence in monetary policy. The risk related to the relative weakness of the asset persists, justifying a cautious approach. The signal is triggered on a daily close above 1.1650. The first target is set at 1.1720, with a final target at 1.1850. The protective stop is placed below the monthly support at 1.1577. Recommended sizing: Reduced position (0.5x).