ECB Hawkish Statement, Supports Euro Performance

Fed Chair Jerome Powell told US lawmakers that the central bank may raise interest rates more than expected after the release of hotter inflation figures and a solid labor market. 

 

Nevertheless, the Euro received strengthening support in trading on Thursday, March 9, 2023 from a number of ECB officials regarding further interest rate hikes.

 

On the other hand, traders also digested hawkish statements by some ECB policymakers, with board members

Robert Holzmann called for four 50 basis point rate hikes and President Christine Lagarde said a 50 bps hike in March was "very, very likely". 

Last week's data showed eurozone inflation fell further to 8.5% in February, compared with the market consensus for a reading of 8.2%, while core rates hit new record highs.

 

Meanwhile, one of the European Central Bank (ECB) officials, Francois Villeroy de Galhau, said on Thursday that the ECB will bring inflation back to the 2% level by the end of 2024 or the end of 2025. Villeroy also added that inflation is still too high in France and Europe. Where inflation will peak during the first semester.

 

Fundamentally, hawkish statements from ECB officials have propped up the Euro's performance for a rebound. Then how technically, see the following analysis:

EUR/USD in the 1-hour period tried to rebound to touch the resistance area of 1.05646 to the next resistance level at 1.06170 which can be seen from the RSI which is already in the oversold area and moving upwards. As for further bearishness, EUR/USD needs to break through the support area at 1.05238 towards the next support level at 1.04690.

 

This analysis is a fundamental and technical view used by the author, not a suggestion or invitation. To get more information click on the image below.