The euro is developing an upward trend on the eve of the speech announced at 14:00 (GMT) by the head of the ECB, Christine Lagarde. Probably, market participants expect to hear tough statements from her about the need for decisive action on the part of the ECB in relation to rising inflation in the Eurozone. Although the Eurozone CPI forecasts suggest a slowdown in annual rates to 10.4% in November, the inflation rate remains the highest in several decades: in October its level was at around 10.6%.
While “risk of a recession has risen,” “we expect further rate hikes to levels needed to bring inflation back to our medium-term target of 2% in a timely manner. Inflation in the Eurozone is too high,” ECB President Christine Lagarde recently said at the European Banking Congress in Frankfurt. “Interest rates are and will continue to be the main tool for adjusting our policies,” Lagarde concluded.
Against the background of a sharp strengthening of the euro, the pair EUR/GBP rose sharply today at the beginning of the European session, reaching an intraday high of 0.8675.
The price rebounded from the key long-term support level 0.8585 and rushed towards the important resistance level 0.8680. In our today’s “Fundamental Analysis” we have already noted that near these levels, we expect a rebound. The signal for the resumption of short positions will be a breakdown of the important short-term support level of 0.8653.
*) for the events of the upcoming week, see the Key economic events of the week 28.11.2022 – 04.12.2022
Support levels: 0.8653, 0.8620, 0.8585
Resistance levels: 0.8680, 0.8690, 0.8720, 0.8825