EURUSD one step closer to key resistance 💵 📈

According to Bloomberg reports, the European Central Bank may begin considering a slower hike in March, which would mean a slower pace than that indicated by ECB President Christine Lagarde in December. While a 50bp hike in February remains the baseline scenario, the chances of a 25bp hike in March have increased. Eurozone CPI inflation revision came in unchanged at 9.2% although the monthly rate of decline came in higher than expected at -0.4% vs. -0.3% and -0.1% previously. European Trade Commissioner Vladis Dombrovskisk commented today on the economic outlook for the European Union. In his view, the EU may even avoid a technical recession and the EU economy contracting pace is much less than expected. Francois Villeroy of the ECB also commented on the Eurozone's economic situation today:

ECB's Villeroy:

• The pace of rate hikes is likely to be less significant this year, but the ECB will continue to tighten monetary policy. The economy should avoid recession this year and consumer activity remains higher than expected. The bank will remain 'pragmatic' on rates and monetary policy;
• Governor Lagarde's guidance of 50 basis points in February still stands. The ECB will keep rates high for as long as necessary. A peak in interest rates is likely to be reached by summer, this year;
• The ECB will bring inflation back to target by the end of 2024 or 2025 with a peak in the first half of 2023. Villeroy indicated that he does not currently see risks that could lead to very high rate levels.

A more optimistic outlook for the eurozone is fueling a rebound on EURUSD. The currency pair is approaching the 1.09 levels, which, if broken, could suggest a breaking stronger upward move.

EURUSD, M30 interval. The euro is strengthening against the dollar and may break through key resistance. The SMA200 (red) and SMA100 (black) averages have formed a 'golden cross' formation, which previously favored the bulls and indicated a demand advantage. If supply keeps EURUSD near 1.085 we may witness a correction towards 1.077, which marks the recent lows. Source: xStation5