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EUR/USD Challenges 1.0900 After ECB Delivers Rate Hike

ByAlex Boltyan
Published 06/15/2023, 10:07 AM
Updated 07/09/2023, 06:32 AM
EUR/USD
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The EUR/USD pair extended gains into a fourth consecutive day on Thursday following the European Central Bank's (ECB) decision to raise its main rates by 25 basis points, as expected.

At the time of writing, the EUR/USD pair is trading at the 1.0880 area, recording a 0.7% daily gain, having touched its highest level in a month at 1.0894.

The European Central Bank announced its decision to raise the main financing rate to 4.00%, the marginal lending to 4.25% and the deposit facility rate to 3.50%. In the subsequent speech, ECB President Christine Lagarde fueled the hawkish narrative as she stated the board is "not thinking about pausing."   
 
Meanwhile, the Federal Reserve decided to skip a rate increase on Wednesday after ten consecutive increases. However, the dot plot and Chair Jerome Powell's hawkish words slammed prospects of rate cuts for the remainder of the year.

 EURUSD Daily Chart

From a technical perspective, the EUR/USD pair's short-term bias is bullish, according to indicators on the daily chart, while the price has managed to climb back above the 20- and 100-day simple moving averages (SMAs) and now challenges the critical 1.0900 resistance area. 

A break above the psychological level could fuel bullish momentum and send the EUR/USD to retest the 1.0970 resistance zone ahead of 1.1000. On the other hand, the 100-day SMA at around 1.0805 is the key support to watch as a drop below would deteriorate the short-term outlook, exposing the 1.0700 zone en route to May's lows at 1.0635.

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