Alexander Kuptsikevich
FxPro Financial Services Limited
The European Central Bank increased its key rate by 50 points to 0.50%. This is more than average analyst forecasts, based mainly on old comments from Bank members. However, rumours of a more decisive move surfaced in the last few days when a period of silence was already in effect. This situation repeated what we saw before the last Fed meeting. The new "expectation management" techniques seem to be spreading fast.
Nevertheless, the euro's reaction to the rate hike shows that the market has not fully priced in the 50-point hike step. EURUSD is adding 0.65% after the announcement, rising to 1.0260.
The EURUSD pair is testing 2-week highs, returning to the upper boundary of this week's trading range and rejecting the negative vibe caused by the Italian political crisis and Prime Minister Draghi's resignation.
However, the current rebound in the euro is still far from the beginning of a recovery. The bulls will have to endure more diverse tests to confirm a full-fledged reversal in the pair.
Right now, the EURUSD growth looks like just a technical rebound after a long decline. It can be considered more significant after a substantial consolidation above 1.0350 (previous global and local lows). A pullback above the 50 SMA, which is near 1.0450, may seal the break-up of the bearish trend.
Amongst the significant fundamental obstacles to the appreciation of the single currency are the European economy, which is deeply mired in an energy crisis, and the extremely high debt/GDP ratios of some of the larger economies, which reduce the scope for fiscal stimulus.
Thus, there are many questions about the sustainability of EURO growth in the near term despite a seemingly decisive ECB rate hike.
Trade Responsibly. CFDs and Spread Betting are complex instruments and come with a high risk of losing money rapidly due to leverage. 77.37% of retail investor accounts lose money when trading CFDs and Spread Betting with this provider. The Analysts' opinions are for informational purposes only and should not be considered as a recommendation or trading advice.
Recommended Content
Editors’ Picks
EUR/USD softens to near 1.1350, overbought RSI condition eyed
The EUR/USD pair attracts some sellers to around 1.1365 during the early European session on Thursday. Traders might prefer to wait on the sidelines ahead of the European Central Bank interest rate decision later on Thursday.
Gold price remains on the defensive below all-time peak amid positive risk tone
Gold price enters a bullish consolidation phase after hitting a fresh all-time peak on Thursday. A modest USD bounce and a positive risk tone cap the commodity amid overbought conditions. US-China trade war concerns, recession fears, and Fed rate cut bets support the XAU/USD pair.
GBP/USD trades below 1.3250 after retreating from six-month highs
GBP/USD snaps its seven-day winning streak, easing to around 1.3230 during Thursday’s Asian session after retreating from a six-month high of 1.3292 reached on Wednesday. Traders now await key US data releases later in the day, including Building Permits, Housing Starts, and more.
RAY sees double-digit gains as Raydium unveils new Pumpfun competitor
RAY surged 10% on Wednesday as Raydium revealed its new meme coin launchpad, LaunchLab, a potential competitor to Pump.fun — which also recently unveiled its decentralized exchange (DEX) PumpSwap.
Future-proofing portfolios: A playbook for tariff and recession risks
It does seem like we will be talking tariffs for a while. And if tariffs stay — in some shape or form — even after negotiations, we’ll likely be talking about recession too. Higher input costs, persistent inflation, and tighter monetary policy are already weighing on global growth.
The Best brokers to trade EUR/USD
SPONSORED Discover the top brokers for trading EUR/USD in 2025. Our list features brokers with competitive spreads, fast execution, and powerful platforms. Whether you're a beginner or an expert, find the right partner to navigate the dynamic Forex market.