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Euro holds above 1.1400 as ECB hawkish expectations support EUR/USD

EUR/USD stays above 1.1400 despite rising oil prices and Middle East tensions, with the ECB deposit facility rate expected to remain at 2.25% ahead of the decision.

Reported · Written up by our desk · Major Pairs

The Euro has held steady above 1.1400 versus the US Dollar on Thursday, showing resilience even as oil prices have surged and hostilities in the Middle East have escalated, according to FXStreet.

FXStreet notes that analysts at major commercial banks point to expectations for additional European Central Bank rate hikes as the key support for EUR/USD. The next ECB decision is widely expected to keep the benchmark Rate on the Deposit Facility unchanged at 2.25%, after a 25 basis points rate hike in June.

While some commentary suggests cooling inflation earlier in the month gave the ECB room to assess further developments, FXStreet highlights that the sharp recovery in oil is also fueling expectations of tightening later. At the same time, analysts warn that hawkish deliberations may be offset by the growth-sapping impact of higher energy prices and a hit to Europe’s terms of trade.

FXStreet adds that while oil-FX correlations have been relatively muted over the past two weeks, the analysts cited a higher-bar move, saying a push back above the 1.1480 to 1.1510 zone remains difficult. The piece also reiterates that the ECB President’s tone in the subsequent press conference can shape near-term Euro direction.

Latest closeEUR/USD 1.141 ▼0.0%

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