- EUR/USD advances on the back of ECB Governing Council members expressing the need for a 75 basis point rate hike in September.
- US consumer confidence rose surprisingly, while job openings beat estimates.
- German inflation figures for August were in line with estimates, except for headline inflation, which was close to the 8% threshold.
The EUR/USD regained parity for the second time this week, rising 0.33%, despite market sentiment being bearish, although a softer US dollar and hawkish rhetoric from the ECB bolstered EUR/USD. At time of writing, EUR/USD is trading 1.0021 above its opening price, having reached a daily high of 1.0054.
EUR/USD remains firm amid hawkish comments from the ECB, despite mixed US data.
EUR/USD is supported by hawkish ECB comments from seven speakers throughout the day. On the other hand, US consumer confidence rose to 103.2, beating expectations of 98. At the same time, the US Department of Labor reported that job openings in the JOLTs Openings report increased by 11.2 million , exceeding all forecasts, while layoffs decreased.
Fed members led by New York Fed President Williams, Richmond’s Barkin and Atlanta’s Bostic made remarks. All of them reiterated the Fed’s commitment to reduce inflation, while adding that the Fed needs to get into tightening territory. Williams said he wants rates above 3.5%, while Barkin said the Fed will do “whatever it takes” to get to the 2% target. For his part, Bostic said that if inflation does indeed move lower, the Fed could refrain from raising rates by 75 basis points.
Statements by ECB members were led by Knot, who said he favors a 75 basis point rate hike, adding that rate normalization is an “essential” first phase, while adding that it is inevitable. an economic slowdown later this year. ECB Vasle echoed some of his comments, adding that inflation is more persistent and supports a hike above 50 basis points, while ECB Muller said the bank should discuss 75 basis points.
Earlier in the day, the ECB’s Wunsch said the bank needs to act quickly on raising rates to a level that may be restrictive even if the EU economy slips into recession. The ECB’s Muller said that price stability is our main concern and has to come first, adding that the ECB has to keep raising rates.
During the European session, the EU economic and industrial sentiment disappointed expectations, but German inflation figures showed that prices rose as expected, except for the year-on-year reading, with German inflation at 7.9%, higher than estimates of 7.8%.
EUR/USD Key Technical Levels
Source: Fx Street
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