Market Spotlight: EUR Rallies on .75% ECB Hike & Hawkish Guidance

ECB Hikes AgainThe Euro has been firmly bid today on the back of the September ECB meeting yesterday. The meeting saw the bank hiking by .75%, as expected, lifting rates to 1.25%. The hike, which was the largest by the ECB in more than half a century, was accompanied by a firmly hawkish set of guidance from the bank. The ECB forecast more rate hikes as likely this year, in line with its view that inflation will persist for longer at higher levels owing largely to the impact of the Russia-Ukraine war and the growing energy price crisis gripping the eurozone. Looking ahead, the bank upgraded its inflation forecasts with eurozone CPI now expected to average 8.1% this year and 5.5% next year.Explaining the move, ECB chief Lagarde said: “We have a goal, we have a mission. We have incredibly high inflation numbers, we are not on target in our forecast and we have to take action. What we know is that we want to get that 2% medium-term target and we will take the necessary steps along the way in order to get there. We think that it will take several meetings to get there.”Technical ViewsEURUSDWhile the pair has been trading lower within a well-defined bear channel this year, the market has recently stalled along support at the .9885 level. With strong bullish divergence on momentum studies, bulls are now looking for a break of the channel top and the 1.0346 level to put the focus on a test of 1.0775 next.

from Tickmill Expert Blog - Forex Traders Blog https://www.tickmill.com/blog/market-spotlight-eur-rallies-on-75-ecb-hike-and-hawkish-guidance"
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