May 17, 2022 07:31 AM ET
By: AnalysisWatch
From a technical point of view, the pair also bounced slightly from the support around 1.0400. Looking at the weekly chart, as overall risk sentiment improved today, the dollar saw a slight decline against the other major currencies.
However, the EUR/USD currency pair received a jolt from the 1.0480 level to 1.0520 as a result of Knot's comments. At this point, a July rate hike is almost certain, but he raised the idea of a possible 50 bps rate hike, which got the markets a bit excited.
The ECB has had its wooing drama, but it is important to remember that the Knot is one of the more fanatical members, and for a central bank that has not raised rates in over a decade, it is hard to believe the sudden change in mentality from mostly dovish to extremely fanatical.
Nevertheless, money markets now expect the ECB to raise rates by around 105 basis points by the end of the year. This compares to around 95 basis points yesterday.
The EUR/USD currency pair has now broken its 200-hour moving average at 1.0494 and holding above 1.0500 gives buyers some breathing space after a continuous downtrend since the beginning of the year.
The 1.0580-00 area will provide another small resistance before we start testing potential Fib levels.
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