ECB: Did they simply cease the upward trajectory of the euro? The threshold for an impending break higher in the euro versus some of its rivals may have just been lifted by the central bank.
The ECB may have just upped the threshold for an impending break higher in the euro relative to certain of its rivals.
The ECB issued the largely expected interest rate increase, which raised expectations that the central bank is getting close to pausing. There were slight hints of exhaustion in the EUR rise heading into the meeting;
The CB increased the main deposit rate by 25 basis points to 3.25%. Following a string of previous rate increases, as anticipated by the market. According to the central bank, interest rates are still not ” stringent” adequate to bring inflation below the ECB’s 2% objective. Future “policy decisions” are mentioned, which refers to potential rate increases later in the cycle.
Weaker Q1 GDP adding to CB down shift
The ECB stated that the effect of the rate rises is beginning to trickle down the economy “with force”. And that the CB’s shift down was likely due to the weak Q1 GDP growth, decreasing inflation, and tighter credit conditions. The terminal rate is subject to negative risks because of the central bank’s exposure to the robust transfer system. Because of this, money markets have reduced their prior forecast of the ECB terminal rate from 3.75% to 3.65%, which has weighed on the EUR.
The EURUSD an Analytical Perspective
There is no question that the overall trend for EURUSD is upward. The 200-week moving average and the close to the start- Feb top of 1.1035 is strong resistance levels for the euro. Although it is presently just shy of the 200-week moving average (currently at roughly 1.1200). On the weekly graphs, an adverse variation (escalating price accompanied by a declining 14-week RSI indicates that the EURUSD rally may be nearing its end.
Of course, this would not automatically signal a shift lower in the near future. In fact, the two may even attempt 1.1200. This presumably involves keeping an eye out for any obvious cracks. On the 240-minute graphs, the key cushion zone appears to be around 1.0900. A fall below the support level would indicate that the immediate
