EURUSD Faces Further Data After ECB Holds Rates

EURUSD – Daily Chart

 EURUSD – Daily Chart 

EURUSD has bounced from resistance again and may look to push toward the 1.08 level. 

On Thursday, the ECB kept its monetary policy unchanged while discussing its thoughts on inflation. In its statement, the ECB kept all three key rates on hold (Deposit Rate at 4.0%, Refi Rate at 4.5%, Marginal Lending Rate at 4.75%) and said that “aside from an energy-related upward base effect on headline inflation, the declining trend in underlying inflation has continued”. 

The bank also removed a statement saying “domestic price pressures remain elevated”. This increases the chances that rate cuts are coming as expected. However, analysts now expect that to be in March, April or beyond. 

The central bank added that the incoming information has broadly confirmed its previous assessment of the medium-term inflation outlook.  

A statement added, “The Governing Council considers that the key ECB interest rates are at levels that, maintained for a sufficiently long duration, will make a substantial contribution to this goal. “ 

However, in a press conference later, ECB President Christine Lagarde said, “The consensus around the table of the Governing Council was that it was premature to discuss rate cuts. “ 

Data from the United States on Thursday showed durable goods orders flat month-on-month, but GDP for Q4 was at 3.3% from 2%. 

Friday will bring German consumer confidence at 3pm HKT. US pricing data will come in the evening with the PCE reading. Dollar strength could continue into the weekend after the GDP surprise, but the ECB was more bullish on rates than expected.

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