- EURUSD updated to its daily high after the ECB hiked interest rates by 50 basis points versus 25 basis points expected.
- The risk of a sovereign debt crisis in Italy could deter traders from making further bullish bets.
- Investors are now awaiting comments from ECB President Lagarde for a significant boost.
The price of EUR/USD It gained some positive traction in the last hour and spiked to a fresh daily high, past 1.0250 after the European Central Bank (ECB) announced its monetary policy decision.
As expected and committed in advance, the ECB followed the global tightening trend and raised its policy rates for the first time since 2011. The landmark decision to raise rates by 50 basis points, against the broader consensus of a surge of 25 basis points, underpinned the shared currency and provided a modest boost to the EUR/USD pair.
That said, a rate hike increases the risk of a sovereign debt crisis in Italy, especially after Mario Draghi decided today to end his term as Prime Minister. This, in turn, could offset the optimism caused by the resumption of Russian gas supplies via the Nord Stream 1 pipeline and prevent traders from placing aggressively bullish bets on the EURUSD pair.
Investors may also prefer to wait for details of the ECB’s new anti-fragmentation tool, aimed at protecting highly indebted countries from rising borrowing costs. Therefore, the focus is on the post-meeting press conference, where ECB President Christine Lagarde’s comments could infuse some volatility around euro crosses.
Technical levels
Source: Fx Street
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