After a two-day slump in gains, the euro increased against the dollar in European trade, touching 17-month highs due to expectations for the ECB’s meeting next week.
According to some observers, the European Central Bank will continue to fight EuroZone inflation and continue raising interest rates.
Following a string of dismal US statistics, the dollar dropped once more, supporting the idea that the 0.25% Fed rate hike scheduled for next week will be the final one.
The recent more pessimistic comments made by ECB officials, which raised doubts about the likelihood of a rate hike in September, also impacted the euro.
Klaas Knot, president of De Nederlandsche Bank, stated that to prevent unduly tightening monetary policy, the ECB would closely examine inflation signals in the coming months.
ECB – This week, the European Central Bank will meet to discuss its policies and the most recent developments in the eurozone. The meeting is anticipated to result in a 0.25% ECB rate increase.
Despite recent gloomy comments from some members, the ECB is anticipated to continue its course of tightening policy because inflation is still persistently high.
Recent US retail sales and housing data fueled speculation that the Fed will terminate the current cycle of policy tightening after the July meeting, fueling worries of a recession in the second half of the year.
As it posts its first daily profit in three days going into Thursday’s European session, the EUR/USD currency pair holds onto modest gains around 1.1220. In doing so, the Euro pair applauds the general decline in the US dollar while paying little attention to the conflicting concerns regarding the Eurozone.
However, Reuters’ analysis emphasizes the multi-year high inflation and the war in Ukraine to highlight the deplorable employment situation in the region and spur confidence about the Eurozone. Yannis Stournaras, a member of the ECB Governing Council, said on Wednesday on CGTN Europe that he wasn’t sure if the ECB would raise rates again following a 25 bps increase next week. The policymaker added that further hikes in interest rates could hurt the economy while also arguing that inflation is declining.
It’s important to note that the US economic transition is drawing more skepticism than the Eurozone’s, which keeps the EUR/USD stronger, particularly as Fed bets point to a policy change after July while ECB conversations are marginally less dovish.
To adorn the economic calendar, the preliminary data for the Eurozone’s Consumer Confidence for July will come before the US Initial Jobless Claims and Existing Home Sales. For obvious instructions, the risk catalysts should receive the majority of focus. If the anticipated EU readings are stronger than expected, the EUR/USD might break over the crucial 1.1280 barriers amid widespread US Dollar weakness; however, if the US data and attitude are less than expected, the bears may not be attracted to the situation.
EUR/USD Long (Buy)
Enter At: 1.12437
T.P_1: 1.12950
T.P_2: 1.13465
T.P_3: 1.13996
T.P-4: 1.14673
S.L: 1.11013
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