The shared currency advanced for the third consecutive day, trading 0.3% higher ahead of the US session on Thursday, changing hands at around 1.0440.
Poor growth-related indicators and dovish US FOMC Meeting Minutes have hurt the US Dollar recently.
FOMC minutes slightly dovish
According to the minutes, a slower pace of interest rate increases would soon be warranted, even while the risk to the inflation forecast remained tilted to the upside. The governors also think the monetary policy is getting close to being “sufficiently restrictive.”
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Following the publication, according to Fedwatch, the odds of a 50 bps raise increased to 79%, and the terminal rate is now predicted to be 5.03%.
ECB minutes neutral
Robert Holzmann, a policymaker at the European Central Bank, stated on Tuesday that he is tilting toward voting for a 75 basis point rise at the next rate-setting meeting in December, but he has not yet made up his mind.
Furthermore, according to Reuters, the minutes from the European Central Bank’s October policy meeting showed on Thursday that a few Governing Council members preferred raising the policy rate by 50 basis points (bps) as opposed to 75.
The accounts also showed that it was commonly believed that the inflation forecast was getting worse. Thus, these changes demonstrated a rising danger of inflation becoming entrenched.
“Governing Council should continue normalizing and tightening monetary policy, whereas it might want to pause if there was a prolonged and deep recession,” the minutes added.
Moreover, as per Reuters, Isabel Schnabel, a member of the Governing Council of the European Central Bank (ECB), stated on Thursday that they will likely need to boost interest rates even higher into the restrictive zone.
An increase in the German Ifo business climate was also helpful to sentiment today. The Ifo index’s “expectations” component increased especially sharply, from 75.9 to 80.0, as the prospect of gas rationing diminished and the government’s sizable relief package neared implementation.
Bullish momentum persists
The two-hour chart currently looks bullish as the euro trades within a symmetrical triangle pattern, usually a bullish breakout formation.
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The following short-term resistance seems to be in the 1.0440 zone, and if broken to the upside, we might see the pair jump toward 1.05.
On the other hand, the intraday support could be located at the uptrend line, currently near 1.0360, and as long as the single currency trades above it, the outlook seems optimistic.