Euro Rebounds on ECB Hike, But Resistance Remains Near 1.17
The EUR/USD exchange rate rebounded from a sharp decline below 1.1600 on Thursday after investors digested US producer-price inflation and the European Central Bank's latest interest rate hike.
Nordea economists expect the ECB to raise rates further in December and March, which could support the Euro through higher returns on euro-denominated assets. The deposit rate would increase from 2.50% to 3.00%, providing potential backing for the currency.
The ECB's monetary policy statement projected inflation at 3.0% this year and 2.5% in 2027, with the latter revised higher. Despite policymakers declining to commit to their next move, Nordea believes there is a strong case for more rate hikes due to extended periods of inflation above target.
The recovery keeps Scotiabank's prediction of a EUR/USD move towards 1.1700 in focus, but an obstacle above current levels must be cleared first. A close above 1.1634 would strengthen the case for another attempt at 1.1700, while a renewed fall through 1.1595 would undermine the recovery.