EUR/USD was trading near a fresh six-week high on Thursday ahead of the ECB policy meeting later in the day, while the US Dollar weakened amid rising hopes the Federal Reserve will implement less aggressive policy tightening to temper recession risks.
“Fundamentally, there are factors that are still favouring the U.S. dollar: rate differentials, the fact that the Fed still has more work to do,” Rodrigo Catril, senior currency strategist at National Australia Bank, was quoted as saying by Reuters.
“But certainly near term, given how much was priced (in), we’ve seen a bit of retracement in the dollar … Our sense is that it’s a bit of a consolidation of the recent moves rather than extension of further dollar declines.”
Market players still anticipate another 75 basis point rate hike from the Fed next week.
Against a basket of six other major currencies, the US Dollar stood near an over one-month low of 109.54.
Meanwhile, the European Central Bank is largely expected to announce a 75 basis point rate increase at its policy meeting later on Thursday.
“The question is whether they want to … show that full commitment to the inflation mandate, or whether they show weakness or concerns in terms of what looks to be a challenging growth outlook,” NAB’s Rodrigo Catril said.
As of 8:40 GMT on Thursday EUR/USD was edging down 0.17% to trade at 1.0063. During the early phase of the Asian session, the major Forex pair climbed as high as 1.0094, which has been its strongest level since September 13th (1.0187).
Daily Pivot Levels (traditional method of calculation)
Central Pivot – 1.0037
R1 – 1.0132
R2 – 1.0183
R3 – 1.0277
R4 – 1.0371
S1 – 0.9986
S2 – 0.9892
S3 – 0.9841
S4 – 0.9790
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