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EUR/USD on the edge after ECB signals end to rate hikes – ForexLive

EUR/USD daily chart

After yesterday’s ECB policy decision, the central bank signaled that interest rate hikes were almost complete, and the euro fell. The question is, how long can they continue this way? longer and higher story? This is especially true as the eurozone economy is stalled and the risk of recession is increasing by the day.

It will be a very difficult challenge for the ECB to manage a soft landing here, and to some extent the market thinks so too. The first rate cut is currently priced in around June 2024.

And central bank trends in EUR/USD have shifted to whether the US or European economy will fare better in the coming months. With the Fed and ECB both in pause mode, it comes down to who can keep interest rates up. longer and higheras they claim.

Things seem to be in the Fed’s favor at the moment, and given that, the path of least resistance is a decline in EUR/USD.

For now, the May low of 1.0635 is holding, but sellers are in full control as the price movement bias remains bearish. It would need to be pushed back above 1.0800 for buyers to actually get any work done, and that’s a long way from here, especially now that the ECB is no longer supportive.

Below 1.0635, there will be little support until the next move closer to 1.0500, and the February and March lows at 1.0516-36 will also come into play.

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