The euro (EURUSD) rose to $1.185, remaining close to its highest point since late January, following indications from the European Central Bank (ECB) that the monetary authority is largely unbothered by the recent increase in the value of the single currency.
With an intention to drive Eurozone economic growth, interest rates were left unchanged at the policy meeting last week, with policymakers signaling inflation is not an immediate problem.
Last week, the EUR/USD fell for the second consecutive week, even though it managed a nice bounce from a key technical zone on Friday as risk assets all staged a rally.
Euro traded on both sides of the range but settled below its high. The $1.1765 area tested before the weekend was a retracement target of the rally from the second half of last month. It frayed $1.1825 ahead of the weekend.
FX traders hinted that the EUR/USD outlook in the week ahead is likely to be impacted the most by the upcoming US jobs report on Wednesday.
Traders explained that the short-term bias in this EUR/USD forecast remains to the upside. As long as US data continues to soften and global risk appetite holds up, the path of least resistance looks towards the 1.200 level, with interim resistance seen around the 1.1900 area
At last week’s policy meeting, the Central Bank kept interest rates unchanged and reaffirmed that inflation is expected to stabilize at its 2% target over the medium term.
During the press conference, President Christine Lagarde said the euro area’s inflation outlook remains in a “good place,” downplaying the recent rally in the euro.
She cautioned, however, that incoming data could be volatile in the months ahead and should not guide policy decisions in isolation. Meanwhile, the US dollar weakened ahead of key US jobs and consumer price index reports due later this week.
The greenback also faced pressure after the Japanese yen strengthened, following a landslide victory for Prime Minister Sanae Takaichi’s ruling coalition in Japan’s Lower House election. Gold Hits $5k as Geopolitical Risks Fuel Safe-Haven Hunting
