EUR/USD marches towards 13-month high near 1.1100 amid hawkish ECB bets ahead of US GDP

• EUR/USD picks up bids to refresh intraday high, reverses late Wednesday’s retreat from multi-month peak.
• Gradually escalating odds of the ECB’s 0.50% rate hike, mixed US data allow Euro buyers to keep the reins.
• Cautious optimism amid US debt ceiling concerns, fears emanating from First Republic Bank propel EUR/USD bulls.
• US Q1 GDP Annualized can bolster Euro’s bullish power on negative surprise.

EUR/USD stays on the front foot around the mid-1.1000s as buyers resume a run-up targeting the highest levels since March 2022, following the previous day’s retreat from 1.1095, amid early Thursday morning in Europe. In doing so, the Euro pair cheers broad US Dollar weakness, as well as the hawkish concerns about the European Central Bank (ECB), ahead of the first quarter (Q1) Gross Domestic Product (GDP), expected to ease to 2.0% on an annualized basis versus 2.6% prior.

Also read: EUR/USD Forecast: Fresh highs but the Euro is running out of time

Interest rate futures suggest a recent pick-up in the market’s bets for the ECB’s 0.50% rate hike in May monetary policy meeting. Although the odds are minor at the latest, the mostly certain 25 basis points (bps) of Fed rate hike and calls of the policy pivot afterward keep the bloc’s central bank more lucrative than its US counterpart, which in turn underpin the EUR/USD run-up despite mixed US data.

As per the latest release, the US Durable Goods Orders rose for March but couldn’t overcome the fishy details of Consumer Confidence released previously. It’s worth noting that the US PMIs were comparatively less firm than their European and German counterparts and hence suggest more economic optimism surrounding the old continent.

On a different page, the US House of Representatives recently passed a bill that enables the government to negotiate the extension of the debt ceiling. However, the policymakers are likely to remain at loggerheads amid the wide difference between the Republicans' and Democrats’ demands. With this, the cautious optimism surrounding the US debt ceiling discussions keeps the Euro pair firmer. Furthermore, the latest tax receipt numbers from the US allow Goldman Sachs (GS) to expect that the US Treasury Department can avoid the risk of a federal payments default till late July, which in turn adds strength to the Euro pair.

Elsewhere, upbeat earnings from Microsoft and Google’s parent Alphabet Inc. allowed Nasdaq to remain firmer. However, the escalating fears from the First Republic Bank (FRB), due to another 20% share price fall on Wednesday following a 50% slump the previous day, weigh on the sentiment and prod the EUR/USD bulls.

Looking forward, US Q1 GDP Annualized will be key to watch for intraday traders of the EUR/USD pair. Also important will be the headlines surrounding US debt ceiling discussions and banking sector news.

Technical analysis

Bearish RSI divergence on the Daily chart joins the EUR/USD pair’s failures to provide a daily closing beyond an upward-sloping resistance line from May 2022, around 1.1090 by the press time, to lure the sellers.

Also read: EUR/USD Price Analysis: Bearish RSI divergence prods Euro bulls, US GDP, 1.1090 eyed