Daily Price Outlook
The EUR/USD is currently trading at 1.0646, which is an increase of 0.39% in the last 24 hours. The pair has reached a new high for the day due to the Dollar Index decreasing and the ECB making hawkish statements.
ECB raises interest rates by 50
On Thursday, the European Central Bank (ECB) successfully navigated what some consider to be the early signs of a potential new financial crisis. During her regular news conference, President Christine Lagarde emphasized the need for caution as financial stability risks continue to grow due to the past year's rate increases, which are beginning to expose the weaker components of the financial system.
In addition, the ECB raised its benchmark interest rates by 50 basis points, citing concerns about inflation. Financial markets had anticipated this move, and there were few expectations of a smaller increase.
Despite the interest rate hike, the EUR/USD pair continued to rise as the ECB sought to control rising inflation in the Eurozone. However, the central bank did not provide any hints about future rate increases or the May political move. Financial experts predict that the ECB will likely raise rates further, but the ongoing tensions in the banking industry will be a significant factor.
Finally, on Friday, Eurostat will release the final figure for consumer inflation in the Eurozone.
Fed might remain steady on interest rates
Investors were concerned that the Federal Reserve would reduce the 50 basis point interest rate increase to improve its resilience against prolonged inflation in the United States.
However, weak monthly inflation, a higher unemployment rate, lower Producer Price Index (PPI) statistics, and declining Retail Demand suggested that January's data was an exception. As a result, Fed Chair Jerome Powell would likely continue to raise interest rates by 25 basis points.
In addition to the dropping inflation, new concerns about a global banking collapse have emerged, making it less likely that the Fed would propose an unchanged monetary policy. Consequently, the Federal Reserve may keep interest rates constant after factoring in lower inflation in February and new banking instability.
The Dollar Index has retested its two-day low at 104.11 and may continue to decline as the Fed's interest rate decision is surrounded by growing uncertainty. Meanwhile, the EUR/USD currency pair has benefited from a weaker US dollar.
Looking ahead, Friday's preliminary UoM Inflation Expectations will provide a clear indication of the Fed's interest rate policy since future inflation expectations can become real inflation.
EUR/USD Intraday Technical Levels
Pivot Point: 1.0600
EUR/USD – Technical Outlook
The EURUSD pair is currently exhibiting new positive trades in an attempt to surpass the key level of 1.0640 and head towards our next target at 1.0745. As a result, we continue to recommend a bullish trend for the upcoming period, with hopes of positive momentum to help push the price even higher.
However, it's worth noting that failure to breach 1.0640 could lead to a bearish rebound, with the price potentially heading towards testing the critical support level at 1.0515 before attempting to rise again.
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