- Applying pressure to the EUR is the strong demand for the US dollar following the unexpectedly high US jobs number released on Friday
- New York Federal Reserve President John Williams said that the labor market is still very strong and noted that they have more work to do on rates
The EUR/USD is just holding on above $1.07, not far from a nine-month high of $1.1034 the pair touched last week, supported by the European Central Bank’s hawkish stance. ECB board member Isabel Schnabel said that the rate hikes delivered by the ECB so far were having little impact on inflation. The ECB raised interest rates by 50 bps at its February meeting to the highest levels since late 2008, flagging at least one more increase of the same magnitude next month. ECB policymaker Klaas Knot said that headline inflation appears to have peaked but added that keeping the current pace of hikes into May could well be needed if underlying inflation does not materially abate.
Applying pressure to the EUR is the strong demand for the US dollar following the unexpectedly high US jobs number released on Friday. Speaking yesterday, Federal Reserve Chair Jerome Powell said US interest rates need to go higher, while in his view, the “disinflationary” process appears to be underway. Also, New York Federal Reserve President John Williams said that the labor market is still very strong and noted that they have more work to do on rates, adding data will determine the path of rate hikes. Finally, Fed Governor Christopher Waller warned that interest rates could go higher than expected.
From a technical perspective in the 4-hour chart, the EUR/USD is skewed to downside risk, suggesting that the market is biased to the Federal Reserve hawks over the ECBs. The EUR/USD has congregated below all of its moving averages, with the 20 SMA crossing below the 200 SMA and currently converging at a resistance level. Furthermore, Momentum indicators remain within negative levels, with the RSI indicator has turned marginally lower at around 40.
