- The EUR/USD exchange rate appears to be drawing a line below the losses incurred in February last week.
- It is likely that it will need to take advantage of a stronger international tailwind if it is to sustain any recovery beyond the nearby technical resistance around 1.0725 on the charts.
- The EUR/USD price is settling around the 1.0692 resistance at the time of writing.
The European single currency - the euro - has rallied against the docile dollar over the past week after S&P Global PMI surveys indicated an early thaw of the winter frost on the economic ground across much of the continent, while the euro price also appeared to be benefiting from the situation. European Central Bank (ECB) policy.
For her part, European Central Governor Christine Lagarde told the Spanish newspaper “El Curio” at the weekend, “What I am sure of is that we will return to our target of 2% in due time and that we will be firm and determined to do so.”
“the ECB has no ceiling, but an inflation target of 2%. This is the inflation target over the medium term, and it is how price stability is determined for us. Like I said, I can't tell you how high the interest rates are. I know it will be higher than it is now and we still have more work to do because we cannot declare victory. And we're making progress, but we still have work to do," she said when asked how high borrowing costs ultimately are.
Another factor that has helped the euro in recent trading has been a rise in market implicit expectations for the European Central Bank's deposit rate, suggesting that a certain benchmark now is widely seen as likely to reach the 4% handle by the end of the year. This comes after Eurostat figures last Thursday indicated that core inflation in Europe rose from 5.3% to 5.6% during February's challenge to both attractiveness and market expectations, pointing to a potentially disturbing discrepancy with the headline or headline rate of inflation.
Overall, the headline or headline inflation rate in Europe eased slightly down from an upwardly adjusted 8.6% to 8.5% in February. It is core inflation that is likely to matter most to ECB policymakers because it is so widely seen as it is more representative of the price pressures generated in the local economy.
EUR/USD Forecast
The recent bounce did not reach the price of the EUR/USD currency pair, to change the general trend, which is still bearish. According to the performance on the daily chart below, the currency pair moved towards the resistance levels 1.0730 and 1.0875, which will give the bulls an incentive to advance further upwards. This week's events and data are important for determining fate. On the other hand, hopes for a rebound may arise if the euro/dollar currency pair returns below the support level of 1.0580.
The EUR/USD will be affected today by the reaction from US Central Bank Governor Jerome Powell's testimony.
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