• The euro has accelerated its recovery to reach levels right above 1.1100.
  • Hopes of a cease-fire in Ukraine and USD weakness are boosting the euro.
  • EUR/USD is likely to meet strong resistance at 1.1100/20 – ING.

The euro has accelerated its recovery from week lows at 1.0900, to reach session highs right above 1.1100 with the US dollar losing ground across the board.

The euro appreciates with the US dollar losing ground

The common currency keeps building up on Thursday, favored by a moderate optimism about an agreement between Ukraine and Russia that might lead to a cease-fire in the battered eastern European country.

Beyond that, ECB President Lagarde has assured earlier today that inflation will stabilize at 2% in the medium-term while ECB’s chief economist, Philip Lane, confirmed that the current inflationary pressures are temporary. These comments seem to have eased concerns after the release of higher-than-expected consumer prices figures released earlier today.

Furthermore, the US dollar remains on the back foot on Thursday as the market seems little impressed by the Federal Reserve’s interest rate and the monetary policy normalization plan disclosed on Wednesday.

US Treasury bond yields, which had reached multi-year highs right before the Fed’s meeting, have pulled back, weighing on the US dollar’s demand. The US Dollar Index, which measures USD’s value against a basket of the most traded currencies, has retreated about 0.5% so far today to hit weekly lows below 98.00.

EUR/USD faces tough resistance at 1.1100/20 – ING

According to the FX Analysis team at ING the pair might find strong resistance right above 1.1100 area: “After the Fed’s success with a hawkish message and some suggestion from sourced reports that the ECB was unhappy with EUR/USD sub 1.10, ECB speakers may be happy to support expectations that the deposit rate is raised 35-50bp by the end of the year (…) EUR/USD could nudge a little firmer on a risk-on day, but we favor gains to stall ahead of the 1.1100/1120 area.” 

Technical levels to watch

This article was originally published by Fxstreet.com.Read the original article here.

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