EUR/USD price forecast: Euro fails at resistance following ECB meeting
The EUR/USD price has declined sharply following a less hawkish ECB
ECB slightly less hawkish
The European Central Bank (ECB) has left lending rates unchanged at the conclusion of its Monetary Policy Committee (MPC) meeting on Thursday (9 June 2022) afternoon.
The central bank has indicated that rates are likely to rise by 25 basis points (0.25%) at its next meeting in July. However if the inflation situation deteriorates further the ECB has warned that it could look to increase rates by a further 50 basis points (0.5%) at its September meeting.
The ruling out of a 50 basis point hike at the next (July) meeting has been seen as less hawkish than initially anticipated, and equated to some weakness in the Euro against a broad basket of currencies.
ECB forecasts
In terms of guidance, the ECB’s outlook for inflation and growth is as follows:
- Inflation of 6.8% in 2022, 3.5% in 2023 and 2.1% 2024
- Gross Domestic Product (GDP) growth of 2.8% in 2022, 2.1% in 2023 and 2024
EUR/USD under pressure
The EUR/USD has now reversed sharply off the 1.0770 resistance level following outcomes from the European Central Bank’s (ECB) Monetary Policy Committee (MPC) meeting. The intraday reversal sees the price of the currency pair moving to test the 1.0625 level.
The long term trend for the EUR/USD remains down (Euro weakness / Dollar strength). In the short term however the currency pair trades within a range between levels 1.0780 (resistance) and 1.0625 (support).
Traders respecting the longer term trend bias might look for short entry should a break of the 1.0625 support level occur (confirmed with a close below). In this scenario, 1.0485 becomes the initial support target from the move. A close below this level would then further consider a retest of the 1.0350 low. Should this trade setup manifest, then a close above resistance at 1.0780 could be used as a stop loss consideration.
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