In line with expectations, the European Central Bank (ECB) has increased its aggressive interest rate by 75 basis points from 0.50% to 1.25% for the September policy meeting after initiating a rate hike at the previous meeting.
ECB President Christine Lagarde said the central bank may need more than 2 meetings, but not more than 5, before ending the rate hike. He signaled that the 75 basis point increase may need to be slowed, but it is not impossible to remain aggressive if the situation calls for it.
The Euro currency did not give a positive reaction immediately after the results of the meeting, on the other hand, the US dollar was seen strengthening in the New York session with the market reaction focused on the hawkish speech by Federal Reserve (Fed) Chairman Jerome Powell on monetary policy.
However, the US dollar is seen to fail to maintain its strengthening until the end of the session and continues at the beginning of the Asian session this Friday morning, the Euro is seen to be taking advantage of the opportunity to rise to the highest level of the week against the US dollar.
Observing the price movement on the chart of the EUR/USD currency pair, the price is seen making a decline of almost 100 pips testing the support level around 0.99500.
However, the price managed to rise again until the end of the New York session and has crossed the 1.0000 parity level at the opening of the Asian session this morning.
The rebound in price is also seen to have been supported by the support level of the Moving Average 50 (MA50) on the 1-hour time frame on the EUR/USD chart to signal the continuation of the bullish trend.
As of 10am local time, the price has risen to a high of around 1.0050 with a target to head towards the resistance zone at 1.0100.
The zone remains a barrier to higher price gains for the previous few weeks.
However, investors will be wary of the expected drop in prices that could occur as a result of the European economic pressure factor squeezed by the energy crisis, which could affect the current strengthening of the Euro currency.
Expectations for a price drop if it happens again are seen to retest the 1.0000 parity level which is likely to be the latest support level for the price.
On the other hand, if the price remains lower, the price support level tested yesterday at 0.99500 will be tested and if successfully breached, the decline will continue to reach the 0.98800 support zone again.
