Euro Traders Look Beyond ECB-Fed Rate Hikes

The Euro (EUR) and US Dollar (USD) have stabilized in recent trading sessions, with the EUR/USD pair holding steady around 1.1485.

Despite the European Central Bank (ECB) raising its key policy rates by 25 basis points last week to combat inflationary pressures, investors are looking beyond hawkish decisions made by both the ECB and Federal Reserve (Fed).

The Fed's decision this week to raise interest rates by 25 basis points to a range of 3.75-4.00% was widely expected, but analysts at UOB Group note that the latest FOMC 'updated Dot Plot' shows a more hawkish policy trajectory.

According to UOB, the median view now indicates a fed funds rate at 4.1% by end-2026 and staying there for 2027, before rising to 3.9% at end-2028. This shift towards a more persistent higher-for-longer stance in US rates suggests that interest rate hikes will continue.

Technically, the EUR/USD pair remains bearish, with spot holding below the 20-period Exponential Moving Average (EMA) at 1.1564. Initial resistance is located at this barrier, and a sustained break above would be needed to ease the current bearish bias and allow for a more meaningful recovery.