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EURUSD Breaks Above Near-Term Resistance on Rate Hike Report

EURUSD Breaks Above Near-Term Resistance on Rate Hike Report

Martin Essex, MSTA, Analyst

EUR price, news and analysis:

- Suggestions that the European Central Bank could increase Eurozone interest rates well before the end of next year is boosting EURUSD.

- Technically, it has broken above near-term trendline resistance – a positive signal.

Our trading forecasts for Q3 have just been published; you can find the EUR guide here.

And check out the IG Client Sentiment data to help you trade profitably.

ECB report lifts the Euro

A report suggesting that the European Central Bank’s rate-setting Governing Council could increase Eurozone interest rates earlier than previously expected, alongside signs of economic recovery in the region, are lifting the Euro.

According to the Bloomberg newsagency, some ECB members see a rate hike at the end of next year as too late. It quoted “people familiar with the matter” as saying that policymakers are uneasy that investors are not betting on a rate hike until December 2019 and that a move in September or October next year is on the cards.

After the Bloomberg story was published, the chances of a September 2019 rate increase climbed to 80% from less than 70% earlier.

ECB Chief Economist Peter Praet weighed in Thursday, implying he was confident that Eurozone inflation is rising and that the risk of deflation has vanished. Meanwhile, data on German industrial orders in May beat expectations Thursday, rising 2.6% month/month and 4.4% year/year – well above the levels predicted by analysts.

EURUSD Price Chart, Daily Timeframe (April 16 – July 5, 2018)

Latest EURUSD price chart.

Chart by IG

Against this background, EURUSD has broken above resistance from a falling trendline joining the highs reached since June 14 and is also now trading above the 20-day moving average – both positive signals. A further move above the 50-day moving average would be another positive development, with the 1.1852 June 14 high a possible target. To the downside, there is support from rising a trendline connecting the lows reached since June 28.

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--- Written by Martin Essex, Analyst and Editor

Feel free to contact me via the comments section below, via email at martin.essex@ig.com or on Twitter @MartinSEssex

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

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