The Euro (EUR) adds to the optimism seen on Wednesday against the US Dollar (USD) and lifts EUR/USD to the area of weekly highs well north of 1.1100 on Thursday. The strong advance in the pair comes on the back of extra weakness in the Greenback, which was particularly magnified after the FOMC event on Wednesday. On this, the Federal Reserve unanimously hiked rates by 25 bps as widely expected, taking the Fed Funds Target Range (FFTR) to 5.25%-5.50%. In addition, at his press conference, Chair Jerome Powell confirmed live meetings for policy statements, citing little change from May and June iterations, while the current level of interest rates support slower tightening if needed.
Later in the session, the European Central Bank (ECB) is forecast to follow suit and raise its policy rates by a quarter percentage point. However, the subsequent press conference by President Christine Lagarde and the bank’s intentions regarding its current tightening campaign beyond the summer are seen grabbing the centre of the debate. In the domestic data space, Germany’s Consumer Confidence gauged by GfK rose to -24.4 for the month of August, while the Unemployment Rate in Spain dropped to 11.6% and Consumer Confidence in Italy eased to 106.7 in July. Across the pond, advanced Q2 GDP Growth Rate, usual weekly Initial jobless Claims, Durable Goods Orders, Pending Home sales, and advanced Goods Trade Balance are all due. EUR/USD finally leaves behind the 1.1100 barrier on Thursday and opens the door to the continuation of the rebound in the very near term.
The next hurdle for EUR/USD appears at the 2023 high at 1.1275, reached on July 18. Once this level is cleared, there are no resistance levels of significance until the 2022 peak of 1.1495 recorded on February 10. In case sellers regain the initiative, EUR/USD should meet immediate contention at Tuesday's weekly low of 1.1020 ahead of the psychological 1.1000 mark, all seconded by provisional support at the 55-day and 100-day Simple Moving Averages (SMA) at 1.0905 and 1.0901, respectively. The loss of this region could open the door to a potential visit to the July 6 low of 1.0833 ahead of the key 200-day SMA at 1.0713 and the May 31 low of 1.0635. South from here emerges the March 15 low of 1.0516 before 2023 low of 1.0481 on January 6. The constructive view of EUR/USD appears unchanged as long as the pair trades above the key 200-day SMA.