- EUR/USD rises on dollar weakness and hawkish ECB comments.
- Federal Reserve Chairman Jerome Powell’s speech on Tuesday provided no guidance ahead of the US CPI report.
- EUR/USD Price Analysis: A Break/Close Above 1.0770 Would Pave The Way To Test 1.0800
The euro (EUR) resumed its bullish trend against the US dollar (USD) and hit a new eight-month high around 1.0776, pending the publication of the Consumer Price Index (CPI) in the United States, which is expected to slow down. Hence, the EUR/USD pair is trading at 1.0759 after marking a daily low of 1.0725.
Euro rose on hawkish ECB comments and expectations that US inflation will ease
Wall Street continues its recovery awaiting the publication of the US CPI. A lack of US economic data release and an irrelevant speech by US Federal Reserve (Fed) Chairman Jerome Powell on Tuesday left EUR/USD adrift amid speculation that US inflation would ease, which could pave the way for a less aggressive Fed. Consequently, the EUR/USD rallied strongly.
Apart from this, the EUR/USD got a boost thanks to hawkish comments from several European Central Bank officials (ECB). On Tuesday, Isabel Schnabel of the ECB stated that “interest rates will still have to rise significantly” and that “inflation will not subside on its own.” On Wednesday, the governor of the Bank of France and member of the Governing Council (GC) of the ECB, Francois Villeroy, stated that the ECB should reach its terminal rate in summer.
Later, the Governor of the Austrian Central Bank, Robert Holtzmann, added that “rates will have to rise significantly more to reach sufficiently restrictive levels to ensure a timely return of inflation to target”, echoing some of his comments Olli Rehn, who added that rates have to rise “significantly” in the next two meetings and reach restrictive levels to cushion inflation.
On the US economic agenda, the Consumer Price Index (CPI) will be published on Thursday, with estimates of 0% month-on-month and 6.5% annually. Core CPI will come in at 0.3% MoM, while the annual estimate is 5.7%.
EUR/USD Price Analysis: Technical Perspective
From a daily chart perspective, EUR/USD breakout of weekly highs around 1.0750 opened door to test June 2022 highs at 1.0773. Once that level is broken, the EUR/USD could test the figure for 1.0800 short term. This scenario is supported by the Relative Strength Index (RSI) which is in bullish territory and heading higher, although the Rate of Change (RoC) suggests volatility remains unchanged. Therefore, the EUR/USD could continue to advance steadily or consolidate.
On the other hand, if the EUR/USD fails to break above 1.0800, the pair would be exposed to selling pressure, which could send the pair down to 1.0750followed by a test of the daily low on January 10 in 1.0711 and the round level of 1.0700.
EUR/USD technical levels
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
