The EUR/USD pair is struggling for direction as investors focus on the latest interest rate decision by the European Central Bank (ECB).
The pair is trading at 1.0251, which is slightly below last week's high of 1.0278 as focus shifts to the upcoming US consumer confidence data and Fed decision.The EUR/USD price moved sideways after the latest ECB decision. The bank decided to deliver its first interest rate hike in more than a decade. It hiked rates by 0.50%, which was bigger than what most analysts were expecting.
The bank also hinted that it will continue hiking rates in the coming months as it continues to battle the rising inflation in the region. It has also ended its quantitative easing program. The pair also moved sideways as Italy, the third biggest economy in the region, moved into a political turmoil. The country's respected prime minister and former ECB governor, stepped down as challenge in his administration continued. This means that the country will likely head to another election later this year.
The next key catalyst for the EUR/USD pair will be the upcoming US consumer confidence data that is scheduled for Tuesday. Economists expect the data to show that confidence declined to 97.3 in July as inflation kept rising. It has dropped from last year's high of 125.1. On the same day, the US will publish the latest new home sales and the housing price index data.
The most important event this week will be the upcoming interest rate decision by the Federal Reserve. Analysts expect that the Fed will keep hiking interest rates this week. It is expected to hike by 0.75% or by even 100 basis points. Finally, the US will publish the first reading of Q2 GDP data.The four-hour chart shows that the EUR/USD pair has been in a bullish trend after it fell to parity this month.
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