Will the market wait and see how the euro reacts following the ECB’s interest rate announcement?

Will the market wait and see how the euro moves following the ECB's policy rate announcement?

27.07.2023

In the previous day’s U.S. currency trading, the Federal Open Market Committee (FOMC) raised interest rates by 0.25% as expected by the market. Although the committee did not signal that rate hikes would end at the next meeting in September, the U.S. dollar fell against the euro.The EUR/USD pair rose from 1.1037 to 1.1070. Although it had been trading below the 4-hour 20-period moving average (MA), yesterday’s rally pushed it above that level. The RSI on the 4-hour chart has also risen from below 30 and is currently hovering around 51, so we will be watching for further gains during European trading hours.

Ahead of today’s ECB policy rate announcement, the euro is falling against the yen. The euro/yen pair has dropped from 155.990 to 155.145. It continued to decline during today’s Asian trading session, touching 154.873. While a 0.25% rate hike is expected at today’s ECB meeting, we will be closely monitoring the direction of the euro/yen pair to see if the euro rises following the expected outcome.

Today’s schedule includes the German GfK Consumer Confidence Survey at 3:00 PM, the UK CBI Retail Trade Survey at 7:00 PM, the ECB policy rate decision and statement at 9:15 PM, U.S. initial jobless claims, U.S. second-quarter GDP, U.S. durable goods orders, and U.S. wholesale inventories at 9:30 PM,at 9:45 PM, the ECB President Lagarde’s press conference; at 11:00 PM, U.S. pending home sales; at 11:30 PM, U.S. weekly natural gas inventories; at midnight, the U.S. Kansas City Fed Manufacturing Activity Index; and at 2:00 AM, the U.S. 7-year Treasury auction. I want to carefully assess how the euro moves following the ECB’s policy rate announcement.