On Wednesday (Oct 26), / fell, temporarily trading at 0.9859, down 0.17%.
FXTM analyst LukmanOtunuga said in a note that this could provide some support for the euro if a 75 basis point rate hike is implemented on Thursday as expected and opens the door to further significant rate hikes in the future.
The ECB will be inclined to implement restrictive measures as soon as possible before the severe inflation shock that has persisted in the eurozone since November 2020 reverses.
A 75 basis point rate hike at Thursday’s ECB meeting seems all but certain, with another 75 basis points likely on December 15.
KevinThozet, an investment committee member at European asset manager Carmignac, said in a report that the ECB was still caught between fighting inflation and a slowing economy, facing the risk of fiscal dominance and that this desire to strike a balance between the two had become increasingly difficult to achieve.
Eurusd traded a few points above the long-term downtrend line from this year’s high of 1.1494.
The pair closed just above the trendline, not yet confirming a bull breakout, but adding signs that a medium-term bottom may have been found.
The next key hurdle is parity.
