On Thursday, the euro / dollar rose by more than 1%. The broad weakness of the dollar and the hawkish measures of the European Central Bank boosted the strength of the euro; Focus on the short-term important technical level of euro / dollar.

EUR / USD soared, USD fell and the European Central Bank hawkish signal provided support

On Thursday, the euro / dollar soared by more than 1% to 1.0607, which was mainly boosted by the broad weakening of the dollar at a time when U.S. Treasury yields fell. The weakness of the US dollar may also reflect the profit taking behavior of some long positions after the US dollar index has risen nearly 6% since the second quarter and has recently reached an extremely overbought state.

At the same time, after Klaas knot, an official of the European Central Bank, released the possible signal of raising interest rates by 50 basis points in July, the euro was supported by the repricing of monetary policy by the market.

After these comments, traders began to reprice that the European Central Bank may raise interest rates by 105 basis points this year, compared with the expected tightening of 95 basis points earlier this week.

Although the latest minutes of the monetary policy meeting released by the European Central Bank on Thursday failed to provide any commitment on the timing or magnitude of the first interest rate hike, it undoubtedly implied that policymakers were increasingly worried about soaring price pressure, and many members urged action without delay.

As inflation approaches its peak and is expected to peak around 9% in the second half of the year, hawks are expected to win the policy battle and push the European Central Bank to take a more radical position in the tightening cycle.

If hawks turn in the short term, the market may begin to further reprice the steeper normalization path, thereby creating a better environment for the stable and moderate recovery of the euro.

In fact, the yield advantage of the dollar is a bad risk for the euro, but at present, the hawks of the Federal Reserve may have reached the peak, so it is unlikely that the dollar will rise sharply from the current level.

The hawkish stage of the European Central Bank may not have arrived, but when the wind changes, the euro is expected to benefit from it.

Technical analysis of euro / dollar trend

The euro / dollar rebounded sharply from last week's low and seems to continue to move towards the important resistance of 1.0642, that is, the high in May. If the Bulls succeed in pushing up the price and breaking through this important resistance, the follow-up attention of euro / dollar can only focus on the resistance accumulation range of 1.0790-1.0800, which is constructed by the 50 day simple moving average and the 38.2% Fibo pullback level of the selling market in 2022.

On the contrary, if the bears return to the market and cause a bearish reversal, the initial support will focus on 1.0460, and if it breaks, further focus on 1.0350, that is, the low point of this year.