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EUR is pushing firmly higher on the back of the June ECB meeting yesterday. The single currency spiked in response to a decidedly hawkish meeting from the bank. Yesterday I outlined that the bar was set very high for the ECB in terms of delivering an upside reaction in EUR and it seems Lagarde and co were well and truly able to clear that bar.
 

Further Rate Hikes Coming

The ECB hiked rates by a further .25%, in line with previous signals yesterday. However, with upward revisions to the bank’s CPI forecasts and firmer assurances that rates will need to stay at higher levels for longer, bulls were given enough conviction to unleash a fresh wave of buying. The strongest catalyst was Lagarde’s signal that a further .25% will be coming in July, essentially, pre-announcing the move as the ECB did earlier in the year.

On the back of a hawkish Fed meeting the prior day, the ECB clearly saw the need to take a stronger stance at this meeting and the market reaction has been clear. For now, the focus remains on a further push higher in EURUSD with EUR also seeing stronger gains on the crosses.
 

Technical Views

EURUSD

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The rally in the EURUSD has seen the pair breaking back above the 1.0785 level. The market is now retesting the underside of the broken bull channel and with momentum studies bullish, the focus is on a push higher and a test of the 1.1126 level next while 1.0785 holds as support. 

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