The EURUSD currency pair rested near a one-month high after the European Central Bank (ECB) increased its rate.
On Wednesday, the Fed halted its most aggressive rate-hiking cycle in a decade. The rate remained within the 5.0 – 5.25% range.
In its new forecasts, the Fed signaled the possibility of further borrowing rate hikes of half a percent by the end of the year. Then, traders began to assess whether the rates would rise by 25 basis points at 72% in July.
On Thursday, the ECB increased interest rates by 25 basis points to 4%. Bank president Christine Lagarde said there is a high probability of another 25 basis point hike in July. The EURUSD rose 1.11% against that backdrop.
The ECB lowered its forecast for eurozone GDP in 2023 from 1.0% to 0.9% and raised the inflation forecast for 2023 to 5.4% from the previous forecast of 5.3%.
The European Bank also said it would stop reinvesting its €3.2 trillion asset purchase program that starts next month. That means the regulator will decrease liquidity as it redeems securities and reduces its balance sheet.
European Union inflation figures will be released today. The annual CPI is projected to remain at 6.1%. Any deviation from the forecast will increase volatility in EUR pairs.
The EURUSD continues to form an uptrend in the H1 timeframe. Yesterday's momentum was limited by the strong resistance of 1.0950.
In terms of wave analysis, the price forms the third ascending wave on the H4 timeframe. The most impulsive wave reached its target and technically worked itself out. The moving averages of the Stochastic Oscillator (standard values) are in the overbought zone. Finding the price in the area of strong resistance and indicators may correct the quotations of the currency pair.
Signal:
Short-term prospects for EURUSD are selling.
Target is at the level of 1.0855.
Part of the profit should be fixed around the level of 1.0915.
Stop-loss is around the level of 1.1020.
The bearish trend is short-term, so choose a trading volume of no more than 2% of your balance.
This content is for informational purposes only and is not intended to be investing advice.
