Home EUR/USD Outlook: ECB to Hold Steady with 4% Interest Rates

EUR/USD Outlook: ECB to Hold Steady with 4% Interest Rates

  • The ECB will likely maintain its interest rates at 4% for an extended period.
  • Traders await interest rate decisions from major central banks.
  • Janet Yellen stated on Monday that she saw no indications of a US recession.

Today’s EUR/USD outlook is bearish as the ECB will likely pause rate hikes after reaching 4%. ECB policymaker Francois Villeroy de Galhau announced on Tuesday that the European Central Bank would maintain its interest rates at 4% for an extended period as part of its strategy to combat inflation. 

-If you are interested in social trading apps, check our detailed guide-

Moreover, he likened inflation to an ailment and interest rates as the remedy. He stated that the remedy was beginning to show its effectiveness and that they deemed 4% to be an appropriate level. Therefore, they intend to keep rates at this level for a significant duration.

Notably, the ECB raised its main interest rate to a historic high of 4%, indicating that this recent increase was likely the final. This is due to the slowing economy in the Eurozone.

Meanwhile, the US dollar experienced a slight decline against a basket of currencies on Monday. Still, it remained close to a six-month high in subdued trading. Traders awaited interest rate decisions from the Federal Reserve, Bank of England, and Bank of Japan later in the week. Furthermore, the dollar achieved its ninth consecutive weekly gain last week, marking its longest winning streak in nearly a decade.

Elsewhere, US Treasury Secretary Janet Yellen stated that she saw no indications of an economic downturn in the United States. The continued strength of the US economy has contributed to the recent rebound in the dollar. 

EUR/USD key events today

Investors will watch data from the Eurozone and the US, including:

  • The Eurozone inflation report.
  • The US building permits report.

EUR/USD technical outlook: Weak rebound may retest 1.0800.

EUR/USD technical outlook
EUR/USD 4-hour chart

On the charts, the EUR/USD has plunged to the 1.0650 support level, where bears have given way to a feeble rebound. The bias is bearish as the price has swung far below the 30-SMA while the RSI trades in bearish territory below 50.

-If you are interested in brokers with Nasdaq, check our detailed guide-

The current rebound is weak but might retest the 1.0800 key level as resistance. At the same time, it would retest the 30-SMA resistance before bears retake control. A break below the 1.0650 level would indicate a continuation of the downtrend.

Looking to trade forex now? Invest at eToro!

67% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you can afford to take the high risk of losing your money.

Saqib Iqbal

Saqib Iqbal

Saqib Iqbal is a market analyst, prop fund trader and mentor, serving the industry with his analysis and educational content since 2011. The author has great exposure to different financial markets and institutions. He's well-known for his day trading reviews and multiple timeframe analysis.