The shared currency rallied more than 1% on Tuesday. The move is sponsored by the dual factor of the weakness in the US dollar and the ECB’s larger rate hike expectations. The pair spiked near one week-high at 1.0269.
The deprecation in the US dollar led to the broader recovery in the riskier asset. The dollar index fell for the third consecutive day to trade below the 107.00 level.
Investors continue to digest Fed’s next move as the market is gearing up for a 75 bps rate hike next week.
In addition, the European Central Bank (ECB) is expected to begin its rate hike for the first time in the last 10 years.
As per the sources, the ECB policymakers are in a mood to raise the key interest rates by 50bps points as compared to market expectations of 25bps. The move is to tame the record-high inflation.
In the latest development, the pipeline from the Russian gas flows via the Nord Stream is expected to start on time on Thursday. This pipeline accounts for more than a third of the Russian natural gas supply to the European Union.
As of press time, EUR/USD is exchanging hands at 1.0243, up 1.01% for the day.
EUR/USD refreshes two-week high
On the daily chart, the formation of the ‘Hammer’ candlestick pattern on July 13 resulted in the bounce back in the asset from a nearly two-year low of around 0.99518.
The pair is facing resistance near 1.02686. A sustained buying pressure could breach the 20-day EMA (Exponential Moving Average) at 1.03287.
The RSI (14) reads at 43 with a neutral bias.