- The euro appreciates throughout the market before the ECB.
- The dollar with mixed results, looking from afar at the Fed.
- EUR/USD with bullish outlook after strong rebound.
EUR/USD accelerated the gains in the last two hours, going from daily lows in the 1.0670 area to rise to 1.0729, the highest level in two days. The pair remains in the high zone, supported by the strength of the euro, the day before the meeting of the European Central Bank.
The euro is among the best performing currencies on Wednesday in the run-up to the monetary policy decision of the European Central Bank (ECB). German 10-year bond yields hit a new high in years near 1.35%. This is a supportive factor for the common currency. The EUR/CHF is at three-week highs about 1.0500 and the EUR/GBP at daily highs above 0.8550 after bouncing more than 50 pips.
The ECB is expected to announce the end of the purchase program and signal an interest rate hike for July. The statement could also include new pronouncements that are expected to affect the euro. The direction will depend on how much in line it is with the ECB’s expectation of a future tightening, which today looks aggressive.
Regarding data, on Wednesday it was known that the Eurozone registered a growth of 0.6% in the first quarter and 5.4% compared to a year ago. The job had a rise in employment of 0.6% in the first quarter. Both reports showed figures above expectations.
In the US, the calendar remains light and on Wednesday the wholesale inventory report stands out. Treasury Secretary, Janet Yellen, will appear again before another congressional committee. Friday will be the key economic report with retail inflation data for May.
EUR/USD gains support
EUR/USD returned above the 4-hour 20 moving average through 1.0705/10 and gained support for a bullish extension. The next resistance can be seen at the 1.0750 area followed by 1.0785, last week’s high.
In case of returning below 1.0700, the euro would show signs of lack of strength, exposing the daily low at 1.067. Beneath the next major support lies at 1.0630.
Technical levels
Source: Fx Street
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