The Euro currency surged in the New York session yesterday following a positive reaction to the results of the latest European central bank meeting.
The European Central Bank (ECB) has raised interest rates by 25 basis points to 4.00%, showing that the central bank's policy tightening is still continuing in an effort to lower inflation.
A follow-up statement by ECB President Christine Lagarde was clearly hawkish when she said there would be an interest rate hike at the July meeting, and several further hikes.
Like other central banks last week and also the Federal Reserve (Fed), most still maintain the objective of lowering inflation despite the Fed temporarily halting interest rate hikes.
The US dollar, however, moved weakly in the New York session yesterday when some American economic data was published, giving room for other major currencies to strengthen again, especially the Euro.
On the price chart of the EUR/USD currency pair, the price has recorded the latest high level yesterday with a daily increase of around 140 pips successfully exhibited.
At first the price hovered above the 1.08000 zone before the initial increase started in the European session before a more energetic surge continued in the next session until the price managed to pass the 1.09000 concentration zone.
The price remains above the Moving Average 50 (MA50) support level on the 1-hour time frame on the EUR/USD chart which has yet to show signs of a reversal.
Thus, after the price reaches a height of around 1.09500, a higher increase can be expected to reach the concentration level at 1.10000.
But it should be noted that the previous hawkish message by the Fed could invite a strengthening of the US dollar at any time.
The price is at risk of falling again, but investors will watch for signs of a trend change such as a drop below the MA50 support level.
Passing the 1.08000 level will further strengthen the expectation of a lower drop for the price with the target to reach around 1.07000 or 1.06000.
