Skip to Content
News & Analysis at your fingertips.

We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site. See our updated Privacy Policy here.



Notifications below are based on filters which can be adjusted via Economic and Webinar Calendar pages.

Live Webinar

Live Webinar Events


Economic Calendar

Economic Calendar Events

Free Trading Guides
Please try again
More View More
Euro Soars: Buoyed by Ukrainian Advance and the Mention of QT from the ECB

Euro Soars: Buoyed by Ukrainian Advance and the Mention of QT from the ECB

Richard Snow, Analyst
What's on this page

EUR/USD News and Analysis

  • Euro surges on Ukrainian advance and a more hawkish ECB follow-up
  • EUR/USD rises 1.4%, eyes key resistance but fundamentals continue to weigh on the currency
  • BTP-Bund spread seen steadily rising ahead of Italian elections. Plenty ECB speakers to go around this week

Euro Surges on Ukrainian Advance and a More Hawkish ECB Follow-up

The euro mustered up a sizeable 1.4% this morning as news filtered through of Ukrainian resistance in the east of the country as Ukrainian forces went on the counter offensive.

Returning our focus to the ECB, there was a clear dissatisfaction amongst ECB governing counsel members after the sizeable 75 basis point hike was fully expected by markets and had little to no effect on markets. Soon after President Lagarde’s speech, the famous ECB ‘sources’ mentioned that rate hikes could top 2% (restrictive territory) to combat inflation and somewhat of an admission that the 2023 growth forecast was on the “rosey” side. Lastly, reports emerged citing that QT is on the cards as talks are to get underway in October with a potential announcement to be revealed at the October ECB meeting.

Today we see the ECB’s De Guindos and Schnabel kick off a week of ECB speakers. The rest of the week is as follows:

  • Tuesday: ECB’s Enria and McCaul,
  • Wednesday Lane, McCaul, Villeroy and EU’s Von der Leyen.
  • Thursday: De Guindos, McCaul, Centeno.
  • Friday: ECB’s Rehn
How to Trade EUR/USD
How to Trade EUR/USD
Recommended by Richard Snow
How to Trade EUR/USD
Get My Guide

EUR/USD Technical Analysis

The EUR/USD pair started the week with a sizeable move higher, picking up where it left off last week. The disappointment showed by markets after the ECB rate hike saw EUR/USD drop towards 0.9900 where price action turned around. The EUR/USD lift is mostly attributed to a softer dollar as the runaway USD has taken a breather. However, it is likely that the USD picks up in the lead up to next week’s Fed meeting where markets price in a 90% probability of another 75 basis point hike.

Resistance shows up at 1.0180 as the nearest challenge to a bullish reversal, with the zone of resistance at 1.028 the next significant level. Support appears at 1.0100 before parity and finally the 0.9900 level once again.

EUR/USD Daily Chart

Source: TradingView, prepared by Richard Snow

However, euro fundamentals continue to grapple with the energy crisis and expect more news on the EU’s emergency energy meeting to make its way to the fore this week. Draft proposals are to be more formally presented this week by the EU’s executive arm.

The combination of aggressive rate hikes - as we are being led to believe from recent ECB commentary and ‘sources’ – and Italian elections in two weeks’ time, could see BTP-Bund yields ramp up to recent highs. Containing yields within the EU’s periphery states remains an integral objective of the ECB as it facilitates the effective transmission of monetary policy across the Union.

BTP-BUND Spread (Italian 10 year yield - German 10 year yield)

Source: TradingView, prepared by Richard Snow

Trade Smarter - Sign up for the DailyFX Newsletter

Receive timely and compelling market commentary from the DailyFX team

Subscribe to Newsletter

--- Written by Richard Snow for

Contact and follow Richard on Twitter: @RichardSnowFX

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