EUR/USD has been in a very clearly defined downward-sloping channel since February. Unexpected bad news is needed to keep the channel trending down, Kit Juckes, Chief Global FX Strategist at Société Générale, reports. 

Is the weather going to break EUR/USD out of its downtrend?

“Warm weather is fuelling (relative) optimism about the energy crisis, even if Germany’s IFO data is deep into recessionary territory and the ECB’s Bank Lending survey shows financing conditions getting tougher.” 

“If recession is ‘in the price’ maybe a hawkish ECB message, 75 bps rate hike and plans for mid-23 QT won’t come as a surprise, but still could trigger some short-covering in EUR/USD.” 

“Some new unexpectedly bad news would be needed to keep the channel trending down.”