On Friday (Oct 28), / low pushed higher, temporarily traded at 0.9991, up 0.29%.
The euro has recently returned to parity against the dollar in anticipation of aggressive rate hikes.
The euro pared gains against the dollar as the decision landed.
On the one hand, inflation remains high in the euro area and the ECB continues to raise interest rates.
On the other hand, macroeconomic data in the euro area continued to fall, recession is “almost certain”, and there is pressure on the European Central Bank to sharply raise interest rates.
In addition to the aggressive rate increase, the ECB decided to change the terms and conditions of its targeted long-term refinancing operations.
The TLTROs were ultra-cheap loans to commercial banks at a time of crisis.
Since the pandemic, the ECB has provided a total of 2.1 trillion euros in ultra-low interest loans to commercial banks.
As the ECB’s rate hike cycle begins, commercial banks can deposit these ultra-cheap loans back at the ECB, earning a risk-free rate.
Eur/USD support :0.9950 0.9900 0.9860 Resistance :1.0010 1.0055 1.0090
