EUR/USD approaching parity. Could a hawkish ECB push it higher?
Updated
The ECB meets this week and is widely expected to increase rates by 75bps. With CPI at 10%, will the central bank indicate that it is willing to hike further going forward?
EUR/USD broke above the top downward sloping trendline of the channel today that the pair has been in since mid-February. If the pair moves above parity, the first resistance level is the 38.2% Fibonacci retracement level from the highs of February 10th to the lows of September 28th, near 1.0284. Above there is strong horizontal resistance at 1.0349/1.0368 and then a confluence of resistance at the 200 Day Moving Average and the 50% retracement of the above-mentioned timeframe near 1.0515.
However, watch the statement closely. If the ECB is more worried about a recession than inflation, the pair could be back at previous lows near 0.9536 in no time!
EUR/USD broke above the top downward sloping trendline of the channel today that the pair has been in since mid-February. If the pair moves above parity, the first resistance level is the 38.2% Fibonacci retracement level from the highs of February 10th to the lows of September 28th, near 1.0284. Above there is strong horizontal resistance at 1.0349/1.0368 and then a confluence of resistance at the 200 Day Moving Average and the 50% retracement of the above-mentioned timeframe near 1.0515.
However, watch the statement closely. If the ECB is more worried about a recession than inflation, the pair could be back at previous lows near 0.9536 in no time!
Trade closed manually
The ECB removed the phrase that the central bank will hike rates “over the next several meetings”. Instead, the ECB said that it will raise rates on a meeting by meeting basis, although it intends to raise rates further based on evolving inflation and the economy. The markets took this as DOVISH, therefore, EUR/USD moved lower. The premise of this idea is that the ECB would be hawkish. Therefore, trade closed as market pulled back into the channel.
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