EUR/USD Struggles After ECB Decision Fails to Boost Euro

The European Central Bank (ECB) decision to raise interest rates has failed to boost the euro's momentum, as evidenced by EUR/USD price action, which is down around -0.2% on the day and moving back toward the 1.15 area.

This suggests that fresh selling pressure has started to affect the pair, even after the ECB decided to raise interest rates from 2.15% to 2.4%, in line with market expectations. The central bank pointed to persistent inflation pressures as one of the main reasons behind the rate hike, especially due to the energy price shock linked to the conflict in the Middle East.

The comments following the decision did not clearly suggest that the ECB is entering a sustained rate-hiking cycle, which may explain why euro-denominated assets have not gained strong appeal in the short term. European bond yields also failed to react strongly, suggesting that demand for the euro remains unconvinced for now.

A possible bearish trendline becomes relevant again: Since the second half of April, bearish movements in EUR/USD have been trying to form a possible short-term bearish trendline inside a wider sideways range that has remained important over the past few months. If this pressure holds over the coming sessions, the possible short-term bearish trendline could gain more relevance over the next few weeks.