Forex Trading | EUR/INR To Break Key Levels Post-ECB?

Forex Trading | EUR/INR To Break Key Levels Post-ECB?

The EURINR pair edges lower for the third successive day today in latest forex trading session. Pair is continued to be pressured by a combination of a strong dollar and rate hiking cycle sentiment. Further, in anticipation of a pause in the ECB’s 14-month-old rate-hiking cycle, the currency weakened.

The US dollar sparked to a two week high as markets hunkered down before a Federal Reserve meeting next week. While the central bank is widely expected to keep rates on hold, Fed officials have still left the door open for at least one more hike this year. Hawkish Fed expectations, elevated US bond yields and a weaker risk tone benefit the Greenback.

Now, the focus remains on the ECB rate decision scheduled later today.

The ECB hiked rate by 4.50% from 4.25%, though signalled that a 14-month-long fight against inflation is nearing the end as price pressures are easing. Furthermore, the economy is slowing to a point that a recession may already be underway, making any further rate hikes increasingly unlikely as per the latest reports coming from the forex trading sessions. Still, the crucial decision is likely to infuse volatility in the pair.

Apart from this, the focus will be on discussion about a quicker reduction of its oversized portfolio of government debt and how long rates need to stay at record highs. The markets are already betting that the next move will be a rate cut, possibly in the second quarter of next year. Hence, investors will closely analyse ECB President Christine Lagarde statement at the post-meeting press conference for fresh cues about the central bank’s near-term monetary policy outlook.

Forex Trading | Technical Outlook

 EURINR pair continued trading in a negative territory since 18 July 2023. The pair turned in a negative trend from the peak of 92.4623 and made a low of 86.9243.00 on 3 Oct 2023.

Yesterday, it settled at 87.8937, down 0.05%.

On the above chart, the pair broke down an ascending triangle pattern. Which is indicating for negative momentum to continue. A break below 87.6360 will put more pressure and the pair may drop towards the next support 87.4065-86.9595 very soon.

On the upside, massive resistance is seen at 88.2580 above it only pair will rebound towards 88.7525-89.5075.00

Apart from this, prospects for further rate hike by the Fed continue to fuel concerns about headwinds stemming from rapidly rising borrowing costs. This sentiment is holding strong support for the dollar, which may hold weakness in EUR.

Commodity Samachar
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