EUR/USD rallies to 1.1720 ahead of ECB interest rate decision

EUR/USD bounces up to session highs at 1.1720 with the ECB in the spotlight.
Eurozone data has shown surging inflation numbers and weakening economic growth.
The ECB is expected to leave rates on hold and hint at a rate hike in the coming months.

Guillermo Alcala FXStreet

The Euro (EUR) is paring losses against the US Dollar (USD) on Thursday, testing Wednesday's highs at 1.1720 at the time of writing after bouncing from 1.1660 lows. Investors seem to have focused on the high Eurozone inflation data ahead of the European Central Bank's (ECB) monetary policy decision due later on Thursday, dismissing the weakening growth in the region.

Eurozone's preliminary Harmonized Index of Consumer Prices (HICP) figures have shown that inflation surged to a 3% year on-on-year (YoY) rate, its highest level since September 2023, from 2.6% in March and above the 2.9% anticiparted by the market consensus. Excluding food and energy prices, the core HICP eased to a 2.2% YoY rate from 2.3% in March.

At the same time, Gross Domestic Product (GDP) figures released by Eurostat revealed that economic growth slowed down to a 0.1% growth in Q1, from 0.2% in the last quarter of 2025, against expectations of a steady 0.2% growth.

These figures pose a significant challenge for the European Central Bank (ECB), which is expected to leave its benchmark rate unchanged, and hint at a rate hike in the coming months. Recent Eurozone data, however, reveal that the bank will have to fine-tune its monetary policy to fight inflation without crushing an ailing growth.

The Fed moves away from monetary easing

On Wednesday, the Fed left rates on hold at the 3.50%-3.75% band, as expected, yet with the most divided committee since 1992, as three policymakers argued that the “easing bias” phrase is no longer appropriate given the spike in energy prices.

Beyond that, Fed Chairman Jerome Powell, who ends his term on May 15, affirmed that he will remain at the bank as Governor, replacing Stephen Miran, who was appointed by Trump in 2025 and voted for a rate cut on Wednesday. Investors dropped expectations of further Fed rate cuts following the meeting, with futures markets shifting to a rate hike by mid-2027. US Treasury yields jumped, and the US Dollar rallied across the board.

Technical Analysis: Euro remains steady above a key support zone

EUR/USD is shrugging off previous bearish pressure as price action returns to Wednesday's peak, at 1.1720. Technical indicators on the 4-hour are also shifting to bullish, with the Relative Strength Index (RSI) popping up above the key 50 level, and the Moving Average Convergence Divergence (MACD) line about to cross the Signal line.

Bulls are likely to meet resistance at Wednesday's highs around 1.1720, which is closing the path to the weekly high at 1.1755. A confirmation beyond that level negates the near-term bearish bias and brings the April 20 high at 1.1790 into focus.

Bearish attempts, on the other hand, are facing an important cluster of supports between 1.1675 and the April 8 intraday low, in the area of 1.1645. A confirmation beyond this area would activate a bearish Head & Shoulders formation, with its measured target near the April 6 low in the 1.1500 area.

(The technical analysis of this story was written with the help of an AI tool.)

Economic Indicator

ECB Rate On Deposit Facility

One of the European Central Bank's three key interest rates, the rate on the deposit facility, is the rate at which banks earn interest when they deposit funds with the ECB. It is announced by the European Central Bank at each of its eight scheduled annual meetings.

Economic Indicator

ECB Press Conference

Following the European Central Bank’s (ECB) economic policy decision, the ECB President gives a press conference regarding monetary policy. The president’s comments may influence the volatility of the Euro (EUR) and determine a short-term positive or negative trend. If the president adopts a hawkish tone it is considered bullish for the EUR, whereas if the tone is dovish the result is usually bearish for the Euro.

AUD/USD reclaims 0.7100 and above

AUD/USD regains the smile, reversing three consecutive daily pullbacks and returning to the area beyond 0.7100 the figure following the Wall St close on Thursday. That said, the softer tone in the US Dollar lends support to the pair’s recovery at the time when market participants continue to digest Wednesday’s hawkish message by the Fed.

USD/JPY looks slightly offered near 156.00 ahead of BoJ

USD/JPY trades with decent losses in the 156.00 region ahead of the opening bell in Asia. Indeed, the pair has faded part of the recent three-day positive streak, faltering just ahead of the 156.50 level. Meanwhile, all the attention is expected to be on the BoJ early on Friday, with investors largely anticipating a 25-bps rate hike.

Gold: Upside appears capped by $4,400

Gold climbs sharply and clinches fresh weekly peaks on Thursday, although the bull run seems to have met some initial hurdle around the $4,400 zone per troy ounce. The yellow metal’s rebound reverses three daily declines in a row and follows the modest retracement in the US Dollar as well as another negative performance of crude oil prices.

Zcash Price Forecast: ZEC eyes $1,500 breakout as retail demand expands

Zcash (ZEC) rises sharply above $1,400 on Thursday as the privacy-focused token defies the broader cryptocurrency market's doldrums this week, driven primarily by macro uncertainty and regulatory headwinds. ZEC’s bullish outlook, though seemingly overextended, remains stable, supported by growing retail demand reflected in the derivatives market.

One hike down, more to come? The Fed’s new rate path says yes

The Federal Reserve (Fed) raised its Fed Fund Target Range (FFTR) range by 25 basis points to 3.75%-4.00% in a unanimous decision, saying the move would support a timelier return to its 2% inflation goal.

How Japan became the World's Banker and why that era may be ending

Japan's ultra-low interest rates helped finance trillions of dollars in global investments for more than a decade, making the Japanese Yen one of the world’s cheapest sources of funding. With the Bank of Japan expected to tighten policy again this week, that advantage may be entering a new phase. While most major economies raised interest rates, Japan remained the world's outlier.