EUR/USD Holds on to Slight Weekly Gains, Eyes 1.0900
2023.01.21 01:51
The pair is closing the last trading day of the week with mild gains, on track to post a green weekly candle as the dollar remains under pressure. At the same time, European Central Bank (ECB) President Christine Lagarde’s hawkish comments on Friday helped to keep the pair near recent multi-month highs.
At the time of writing, the EUR/USD pair is trading at the 1.0840 area, 0.1% above its opening price, while it is headed for a mild 0.1% weekly increase, the second in a row.
ECB President reiterated on Friday that rate increases will continue as planned. Lagarde noted that anyone who thinks the ECB is pivoting is wrong, as the bank wants rates at a sufficiently restrictive level to achieve its inflation target. She also added that the Eurozone might only see “a small contraction”.
On Thursday, the ECB Accounts for the December 14-15 meeting revealed that although more than a third of Governing Council members wanted to raise interest rates by 75 basis points at the time, they agreed to settle for a 50 bps hike in exchange for harsh messaging about future increases and a solid promise to immediately begin Quantitative Tightening.
Across the pond, the U.S. stock indexes traded in the red while the advanced, limiting the dollar’s retreat. Ahead of the Federal Open Market Committee (FOMC) February 1 meeting, investors will eye the final public appearances of Fed policymakers before the blackout period.
From a technical standpoint, the EUR/USD maintains a positive short-term bias despite indicators losing traction on the daily chart. The shared currency continues to trade above its main moving averages and key support levels.
On the upside, this week’s nine-month high at 1.0887 stands as a critical short-term resistance, followed by the 1.0935 area and the 1.1000 psychological mark. On the flip side, support levels are seen at 1.0800 and the 20-day SMA at around 1.0710.
