EUR/USD jumps more than 1% as discussions of an ECB rate increase impact the USD

EUR/USD Surges After ECB Holds Rates Steady Amid Speculation of Future Hikes

The EUR/USD currency pair climbed over 1.16% as the European Central Bank (ECB) opted to keep interest rates unchanged. Meanwhile, reports surfaced suggesting that ECB officials may consider raising rates as early as April. Across the Atlantic, the Federal Reserve also left its rates on hold, with Chair Jerome Powell adopting a stance that was interpreted as neutral to slightly hawkish during his remarks to the press.

Euro Strengthens on ECB Signals and Weakening US Dollar

After rebounding from lows near 1.1440, EUR/USD was last seen trading at 1.1582. The US Dollar's broad decline, combined with policymakers' concerns about ongoing tensions in the Middle East, has fueled speculation—cited by three Reuters sources—that a rate increase could be on the table as soon as April.

Rising oil and natural gas prices, which are particularly impactful for the Eurozone due to its reliance on imports, remain a key concern for ECB officials. Despite these pressures, the ECB maintained its deposit facility rate at 2%, the main refinancing rate at 2.15%, and the marginal lending rate at 2.40%.

In its policy statement, the ECB acknowledged that “The war in the Middle East ... will have a material impact on near-term inflation through higher energy prices.” The statement also noted that the longer-term effects would depend on the conflict’s duration and intensity, as well as how energy costs influence consumer prices and the broader economy.

During the press conference, ECB President Christine Lagarde emphasized the Eurozone’s resilience and stated that the current low inflation environment positions the central bank well to handle external shocks. She reiterated that decisions on interest rates will be made on a meeting-by-meeting basis, guided by incoming data.

US Data Fails to Lift the Dollar

In the United States, the latest Initial Jobless Claims report for the week ending March 14 did little to support the US Dollar, which dropped over 1% to 99.21 on the US Dollar Index (DXY). Jobless claims fell to 205,000, beating expectations for a rise to 215,000.

Additionally, January’s New Home Sales declined by 17.6% month-over-month, a steeper drop than December’s 1.7% decrease, largely attributed to severe winter weather.

Following these releases, US Treasury yields retreated after an initial spike. Despite this, market participants do not anticipate any rate cuts from the Fed through 2026, according to Prime Market Terminal data.

Upcoming Economic Events

Looking ahead, the Eurozone will release figures for the Current Account, Balance of Trade, and Germany’s Producer Price Index (PPI). In contrast, the US economic calendar is relatively quiet, but geopolitical developments involving the US are expected to influence the Dollar’s trajectory.

EUR/USD Technical Analysis

On the daily chart, EUR/USD is trading at 1.1585. The short-term outlook remains slightly bearish, as the price is positioned just below a cluster of simple moving averages near 1.1730, keeping the pair beneath its medium-term equilibrium. Although the pair recently broke below a descending resistance trend line from 1.2086, this move has not sparked sustained gains, and selling pressure has re-emerged below this level. The Relative Strength Index (RSI) stands at 45.65, below the neutral 50 mark, indicating weak momentum and suggesting further downside risk as long as rallies are capped by the moving averages.

• Resistance: The first hurdle is at 1.1636, where recent attempts to recover have stalled. Above that, the moving average cluster near 1.1730 and a stronger barrier at 1.1820 could limit gains. A daily close above 1.1820 would be needed to reverse the bearish outlook and target 1.1900.
• Support: Immediate support lies at 1.1567, followed by 1.1512. A break below these levels would expose the 1.1417 region. Falling through 1.1417 would confirm a continuation of the downtrend and shift attention to deeper support below 1.1400.

(This technical analysis was prepared with assistance from an AI tool.)