- EUR/USD has managed to pull away from session lows on hawkish ECB commentary.
- The pair continues to trade with an ascending regression channel.
- Souring sentiment could limit the pair's potential gains.
EUR/USD has regained its traction and climbed toward 1.0900 after having dropped to the 1.0850 area during the European trading hours on Wednesday. The negative shift witnessed in risk sentiment, however, could make it difficult for the pair to gather bullish momentum in the short term.
The modest recovery witnessed in the US Dollar Index weighed on EUR/USD in the first half of the day. With several European Central Bank (ECB) policymakers delivering hawkish remarks ahead of the bank's 'quiet period' that will start on Thursday, the Euro managed to hold its ground.
"We need to continue to increase rates at our meeting next week – by taking a similar step to our December decisions," European Central Bank (ECB) Governing Council member Gabriel Makhlouf said on Wednesday. Echoing ECB President Christine Lagarde's comments, Makhlous further added that interest rates will have to rise significantly at a steady pace to reach levels sufficiently restrictive.
On a similar note, ECB policymaker Bostjan Vasle noted that it would be appropriate to hike rates by 50 basis points at the next two meetings.
Meanwhile, Wall Street's main indexes opened deep in negative territory and the S&P 500 and the Nasdaq Composite indexes were last seen losing more than 1% on the day. In case the US stock indices' correction deepens later in the day, the US Dollar could find demand as a safe haven and limit EUR/USD's upside.
EUR/USD Technical Analysis
EUR/USD returned within the ascending regression channel after briefly dropping below it earlier in the day. Moreover, the Relative Strength Index (RSI) indicator on the four-hour chart rose above 50, suggesting that sellers are struggling to dominate the pair's action.
Initial resistance is located at 1.0900 (mid-point of the ascending channel, psychological level). If EUR/USD rises above that level and starts using it as support, it could stretch higher toward 1.0940 (upper limit of the ascending channel) and 1.0980 (former support, static level).
On the downside, a four-hour close below 1.0860 (lower limit of the ascending channel) could bring in additional sellers and open the door for an extended slide to 1.0840 (50-period SMA) and 1.0800 (psychological level) afterward.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended Content
Editors’ Picks
AUD/USD tumbles toward 0.6350 as Middle East war fears mount
AUD/USD has come under intense selling pressure and slides toward 0.6350, as risk-aversion intensifies following the news that Israel retaliated with missile strikes on a site in Iran. Fears of the Israel-Iran strife translating into a wider regional conflict are weighing on the higher-yielding Aussie Dollar.
USD/JPY breaches 154.00 as sell-off intensifies on Israel-Iran escalation
USD/JPY is trading below 154.00 after falling hard on confirmation of reports of an Israeli missile strike on Iran, implying that an open conflict is underway and could only spread into a wider Middle East war. Safe-haven Japanese Yen jumped, helped by BoJ Governor Ueda's comments.
Gold price jumps above $2,400 as MidEast escalation sparks flight to safety
Gold price has caught a fresh bid wave, jumping beyond $2,400 after Israel's retaliatory strikes on Iran sparked a global flight to safety mode and rushed flows into the ultimate safe-haven Gold. Risk assets are taking a big hit, as risk-aversion creeps into Asian trading on Friday.
WTI surges to $85.00 amid Israel-Iran tensions
Western Texas Intermediate, the US crude oil benchmark, is trading around $85.00 on Friday. The black gold gains traction on the day amid the escalating tension between Israel and Iran after a US official confirmed that Israeli missiles had hit a site in Iran.
Dogwifhat price pumps 5% ahead of possible Coinbase effect
Dogwifhat price recorded an uptick on Thursday, going as far as to outperform its peers in the meme coins space. Second only to Bonk Inu, WIF token’s show of strength was not just influenced by Bitcoin price reclaiming above $63,000.