EUR/USD sees its 2nd-biggest one-week rally in the last six year
The world’s most widely-traded currency pair has had a heck of a week!
EUR/USD opened the week near 1.1140, essentially its lowest level in more than 18 months, before gaining ground every single day this week to trade solidly above 1.1400 as we go to press. On a percentage basis, the pair’s 300-pip rally ranks as the second-biggest 1-week gain in the past six years!
From a fundamental perspective, we saw mixed data out of the US, but by far the bigger driver of the move came from across the Atlantic. In its monetary policy meeting, the ECB expressed concern with ongoing inflation readings, refused to rule out an interest rate hike this year, and suggested it would re-calibrate policy in March. For a meeting that was expected to be a complete non-event, this marked a significant hawkish shift by the ECB.
Technically speaking, EUR/USD has now broken above its 8-month bearish trend line to test a nearly 3-month high around 1.1480. While a quick bout of profit-taking early next week can’t be ruled out, the longer-term technical bias in EUR/USD has now been erased. Moving forward, bulls will be looking for a “higher low” to form in the 1.13-1.14 area to further confirm the change in trend and set the stage for a more significant rally toward 1.16 or 1.17 heading into the spring.
EUR/USD opened the week near 1.1140, essentially its lowest level in more than 18 months, before gaining ground every single day this week to trade solidly above 1.1400 as we go to press. On a percentage basis, the pair’s 300-pip rally ranks as the second-biggest 1-week gain in the past six years!
From a fundamental perspective, we saw mixed data out of the US, but by far the bigger driver of the move came from across the Atlantic. In its monetary policy meeting, the ECB expressed concern with ongoing inflation readings, refused to rule out an interest rate hike this year, and suggested it would re-calibrate policy in March. For a meeting that was expected to be a complete non-event, this marked a significant hawkish shift by the ECB.
Technically speaking, EUR/USD has now broken above its 8-month bearish trend line to test a nearly 3-month high around 1.1480. While a quick bout of profit-taking early next week can’t be ruled out, the longer-term technical bias in EUR/USD has now been erased. Moving forward, bulls will be looking for a “higher low” to form in the 1.13-1.14 area to further confirm the change in trend and set the stage for a more significant rally toward 1.16 or 1.17 heading into the spring.