Introduction:
The EUR/USD has been in a bullish momentum for quite some time, reaching a high of 1.1075 level. However, the bullish momentum seemed to have eased last week Thursday as the European Central Bank (ECB) decided to hike rates in line with consensus, which had already been priced in, leading to some profit-taking around relatively elevated levels for the pair. This article will delve deeper into the reasons behind the pullback and what traders can expect in the coming weeks.
Reasons for the Pullback:
The EUR/USD saw a pullback as a result of the ECB’s decision to hike rates in line with consensus. The decision to hike rates was not surprising to traders as it had already been priced in. However, the market saw some profit-taking around the relatively elevated levels for the pair.
Traders were also looking for clues as to what the ECB would do next. The ECB had already ended its bond-buying program and was expected to raise rates in the near future. The market was looking for some guidance from the ECB on its future monetary policy, which was not forthcoming.
What Traders Can Expect in the Coming Weeks:
Traders can expect the EUR/USD to continue to trade in a range-bound manner as the market digests the ECB’s decision to hike rates. The pullback may continue in the short term, but the overall bullish momentum is expected to remain intact.
Traders should keep an eye on economic data from the Eurozone and the US, which can have an impact on the pair. Inflation data from the US and the Eurozone, as well as the US Non-Farm Payrolls data, are important indicators that traders should watch out for.
Conclusion:
The EUR/USD saw a pullback last week as the ECB decided to hike rates in line with consensus. The market saw some profit-taking around the relatively elevated levels for the pair. Traders should expect the EUR/USD to continue to trade in a range-bound manner as the market digests the ECB’s decision to hike rates. Economic data from the Eurozone and the US will play a key role in the direction of the pair in the coming weeks.
