Euro regains 1.1100 and above ahead of ECB

• Euro accelerates its advance beyond 1.1100 against the US Dollar.
• Stocks in Europe trade with marked gains on Thursday.
• EUR/USD extends further the recent breakout of the 1.1100 barrier.
• Germany’s Consumer Confidence improved a tad in August.
• The ECB is expected to hike rates by 25 bps later in the session.
• US Flash Q2 GDP takes centre stage in the docket.

The Euro (EUR) adds to the optimism seen on Wednesday against the US Dollar (USD) and lifts EUR/USD to the area of weekly highs well north of 1.1100 the figure on Thursday.

The strong advance in the pair comes on the back of extra weakness in the Greenback, which was particularly magnified after the FOMC event on Wednesday. On this, it is worth recalling that the Federal Reserve unanimously hiked rates by 25 bps as widely expected, taking the Fed Funds Target Range (FFTR) to 5.25%-5.50%.

In addition, at his press conference, Chair Jerome Powell confirmed live meetings for policy statements, citing little change from May and June iterations, while contractionary interest rates now support slower tightening if needed.

Later in the session, the European Central Bank (ECB) is forecast to follow suit and raise its policy rates by a quarter point. However, the subsequent press conference by President Christine Lagarde and the bank’s intentions regarding its current tightening campaign beyond the summer are seen grabbing the centre of the debate in the afternoon of the old continent.

In the domestic data space, Germany’s Consumer Confidence gauged by GfK rose to -24.4 for the month of August, while the Unemployment Rate in Spain dropped to 11.6 and Consumer Confidence in Italy eased to 106.7 in July.

Across the pond, advanced Q2 GDP Growth Rate, usual weekly Initial jobless Claims, Durable Goods Orders, Pending Home sales, and advanced Goods Trade Balance are all due.

Daily digest market movers: Euro gathers extra steam post-FOMC

• The EUR regains composure and surpasses 1.1100 vs. the USD.
• The USD Index faces extra selling pressure and breaches 101.00.
• Investors will scrutinize the ECB plans for the summer.
• US, German 10-year yields advance modestly so far.
• Consensus expects the ECB to raise rates by a quarter point.

Technical Analysis: Euro now targets the 2023 peak at 1.1275

EUR/USD finally leaves behind the 1.1100 barrier on Thursday and opens the door to the continuation of the rebound in the very near term.

The next hurdle for EUR/USD appears at the 2023 high at 1.1275 (July 18). Once this level is cleared, there are no resistance levels of significance until the 2022 peak of 1.1495 recorded on February 10.

In case sellers regain the initiative, EUR/USD should meet immediate contention at the so far weekly low of 1.1020 (July 25) ahead of the psychological 1.1000 mark, all seconded by provisional support at the 55-day and 100-day SMAs at 1.0905 and 1.0901, respectively. The loss of this region could open the door to a potential visit to the July low of 1.0833 (July 6) ahead of the key 200-day SMA at 1.0713 and the May low of 1.0635 (May 31). South from here emerges the March low of 1.0516 (March 15) before the 2023 low of 1.0481 (January 6).

Furthermore, the constructive view of EUR/USD appears unchanged as long as the pair trades above the key 200-day SMA.