EURUSD is on the rise today with the main currency pair testing the 1.10 area. Upward move on the pair today is driven primarily by US CPI data for March but also by comments from ECB member Holzmann.
A lower-than-expected headline US CPI reading so hawkish Fed bets get trimmed with markets now pricing in just slightly over 50% chance of a 25 basis point rate hike in May. However, core gauge matched expectations and climbed from 5.5 to 5.6% YoY. This will be a source of concern for the Fed as underlying inflation seems to be more sticky than some hoped.
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Create account Try a demo Download mobile app Download mobile appRemarks from ECB member Holzmann were very hawkish with the central banker saying that inflation outlook argues for another 50 basis point rate hike in May. Holzmann added that rates will need to continue to rise beyond May and that the ECB may be able to accelerate QT starting from July this year. However, it should be noted that Holzmann is known for being one of the biggest hawks at ECB so those comments should not really come as a surprise.
Taking a look at EURUSD chart at D1 interval, we can see that the pair is attempting to break above the resistance zone ranging between 50% retracement of the downward impulse launched in early-2021 and 1.10 mark. Note that this zone halted the previous upward impulse in early-February.
EURUSD at D1 interval. Source: xStation5
