- The European Central Bank slowed the rate at which it raised interest rates.
- The ECB increased the rate it pays on bank deposits by 50 basis points to 2%.
- Lagarde promised three more 50bps rate hikes to tame inflation.
Today’s EUR/USD outlook is bullish as the ECB raised rates for the fourth time. On Thursday, the European Central Bank slowed the rate at which it raised interest rates, but it emphasized that further tightening was still to come.
-Are you looking for automated trading? Check our detailed guide-
It also announced plans to drain money from the financial system as part of its relentless fight against runaway inflation.
The ECB increased interest rates at an extraordinary speed after being caught off guard by unexpected price increases. Since economies began to recover from the COVID-19 epidemic, inflation has risen sharply, driven first by supply constraints and later by rising energy prices due to Russia’s invasion of Ukraine.
It increased the rate it pays on bank deposits by 50 basis points to 2% in a move that followed similar ones this week by the Fed and Bank of England, pulling away from a decade of ultra-easy policy.
With price pressures showing some signs of peaking and a recession looming, the decision, which was expected, indicated a slowdown in the rate of tightening from 75-basis-point rises at each of the ECB’s two previous meetings.
However, sources told Reuters that to win over opponents to the slowdown, ECB President Christine Lagarde had to promise that rates would be raised again, possibly three times, by the same amount.
EUR/USD key events today
Investors will pay attention to eurozone inflation data coming out later today. Economists expect the rate to hold at 10.0% for November. A surprising figure might cause some volatility in the EUR/USD.
EUR/USD technical outlook: Strong rejection above 1.0670
The chart above shows the price trading below the 1.0670 resistance level after attempting to break above it and getting rejected. The price made a big-bodied bearish candle, pushing back below the 1.0670 resistance, showing bears are getting stronger.
-If you are interested in forex day trading then have a read of our guide to getting started-
However, the bullish trend remains intact as the price is comfortably above 30-SMA. The RSI is also above 50, a pivotal level. Bears might take over if bulls do not show as much strength by breaking above the 1.0670 resistance. This would mean a break below the 30-SMA and the 1.0580 support.
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.
Share
Saqib Iqbal
