EUR/USD Tests the Support Above 1.08, As ECB Starts Accepting Rate Hikes
Today we are seeing a slight pullback in the USD, as Treasury yields slide lower, with the 10-year rates at 4.10%. However, the Euro is looking even weaker. We heard ECB members today mention rate cuts. Even though they’re rejection March and April options, they are accepting that they will start to cut rates not too late, which is dragging the Euro lower, sending it to 1.08 lows, which is a support zone.
EUR/USD Technical Analysis
Traders have increased their bets for ECB to lower interest rate, which is enough to put pressure on EUR/USD which is down 0.4% to 1.0820s. The previous technical support level at around 1.0840 which has served as a floor for price activity in recent weeks has been broken and it will likely provide some resistance on the way up if buyers decide to have a go.
We can see on the H4 chart, that after the reversal in late December, moving averages turned into resistance right away. The 100 SMA (green) was the first to act as a resistance indicator early this month, while now the 50 SMA (yellow) is pushing the highs lower in EUR/USD , which is a strong sign that sellers are in control. Now the next support will be 108, which will likely be broken soon, probably tomorrow, especially is we see a comeback in the USD.
ECB Members Mentioning Rate Cuts
Remarks by ECB policymaker, Peter Kažimír
- Rate cut in June is more probable than in April
- The next move will be a rate cut and it is within our reach
- A rate cut in June is more probable than April but exact timing is secondary to the decision’s impact
- Patience is essential before making pivotal decisions
- ECB is not behind the curve, it is markets getting ahead of the event
- Disinflation signs are positive but not yet enough to make a confident conclusion
They’re still trying to make the market think that they will push back as much as possible. But, traders have now even fully priced in a 25 bps rate cut for April with 142 bps worth of cuts priced in for the year. Will the ECB cave in to that eventually?
EUR/USD Live Chart
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