EURUSD is making huge gains at the beginning of a new week with the main currency pair trading 1.5% higher at press time. EURUSD rose to a 4-week high just shy of 1.02 handle as sentiment in Europe improved.
There seem to be two reasons behind the solid performance of the common currency on Monday. The first one is comments from ECB members over the weekend. Nagel and Elderson noted that interest rates in the euro area will have to rise further in order for the ECB to get a grip over inflation even if the European economy may be heading for a recession. On top of that, Reuters reported that ECB members it spoke to acknowledged that rates will need to increase to restrictive levels.
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Create account Try a demo Download mobile app Download mobile appThe second reason behind improved sentiment in Europe are news from Ukraine, where a major Ukrainian counteroffensive in the Kharkiv region made substantial gains and liberated numerous villages. Russian setbacks on the Ukrainian front rise hopes that talks between Ukraine and Russia will commence soon or later. However, both sides repeat that they are not interested in negotiations right now.
Taking a look at EURUSD chart at H1 interval, we can see that the pair jumped above the resistance zone marked with 50% retracement in the 1.0120 area and continued to move higher this morning. Pair even attempted to break above the resistance zone ranging between 61.8% retracement of late-August downward move and the 1.0185 handle but this advance was halted slightly below 1.02 mark. However, if bulls regain control and break above the 1.0185 handle, a move towards the next potential resistance at 1.0250 may come next.
Source: xStation5
