EUR/USD Remains Bullish Today AS ECB Presses on Strong Rate Hikes
Skerdian Meta • 2 min read
EUR/USD has been on a strong bearish trend, particularly this month, despite the European Central Bank (ECB) starting to raise interest rates in the last meeting. The pair fell below parity and got close to 0.95 yesterday in the early hours o the morning, before the bullish reversal higher.
Earlier today EUR/USD was showing a more bearish bias as it moved away from 0.9700, reinforcing the expectations of continuing the bearish trend for the rest of the day, with targets 0.9550 level as the next main station, while according to Wells Fargo, the EUR/USD could fall to 0.91 by the first quarter of next year. They point out that the European Central Bank will lag well behind the Federal Reserve and also consider that economic conditions in the Eurozone are worsening.
Although in the last two days we have seen some bullish momentum and today the 20 SMA (gray) held as support. The ECB members are making some hawkish comments on rate hikes again which is helping the sentiment further.
EUR/USD H4 Chart – The 20 SMA Turns Into Support
Resuming the bullish momentum again today
Remarks by ECB policymaker, Gediminas Simkus
ECB’s Olly Rehn Speaking
- Significant rate hikes are needed in the coming meetings
- ‘Significant’ could mean 50 bps or 75 bps in October
- Frontloading in July and September has been justified
- Expects the ECB to get to neutral rate by Christmas
This just echoes Lagarde’s remarks earlier in the week when she said that the ECB will still have to raise rates for the next ‘several’ meetings. A better question would be where exactly does Rehn see the neutral rate as being?
Eurozone September Final Consumer Confidence
- September final consumer confidence -28.8 points vs -28.8 prelim
- Economic confidence 93.7 points vs 95.0 expected
- Prior 97.6; revised to 97.3 points
- Industrial confidence -0.4 points vs -1.0 expected
- Prior 1.2; revised to 1.0 points
- Services confidence 4.9 points vs 7.0 expected
- Prior 8.7 points; revised to 8.1
Euro area economic confidence falls sharply in the latest monthly reading to its lowest since November 2020, owing to another jump in inflation expectations. The reading for the latter moved up from a revised 37.0 in August to 41.3 in September – posting its first mark higher since March.