EUR/USD Holds Bullish Structure Amid ECB Hawkishness
The EUR/USD pair has maintained its bullish structure despite being rejected near 1.1700, thanks to a mild and orderly correction. The failure point is at the late May highs of 1.1685, where bulls could not find acceptance above. This rejection has been precise, with the level also coinciding with the 78.2% Fibonacci retracement of the May-June selloff at 1.1692.
The three-month high near 1.1697 printed on August 21 remains unthreatened. The spot price holds above previous resistance at 1.1620, which keeps the near-term bullish structure intact. The daily Relative Strength Index sits above 65 and MACD remains in modestly positive territory.
The ECB's accounts published this morning have made the euro side of the equation considerably more specific. Policymakers were already penciling in a further rate increase, potentially as soon as September, according to the account of the July 22-23 Governing Council meeting. The language is direct: another rate hike would likely be necessary unless the inflation outlook improved significantly.
The word 'pause' appears twice in the account, indicating that the July decision to hold rates steady was nothing more than a pause in rate hikes. This has hardened into conviction, with the ECB now prepared to move. The September 9-10 meeting will see a 25-basis-point move on lifting the deposit facility rate from 2.25% to 2.50%, as market pricing has already tracked.