Yesterday, the president of the European Central Bank refrained from commenting on the further path and prospects of monetary policy. He also did not comment on the situation with the high rate of the European currency. All this led to the formation of the next wave of growth in risky assets, which affected the euro.
The EURUSD pair has updated its annual highs and is trying to gain a foothold above the key resistance level of 1.2050.
If at the beginning of the week a number of officials of the Federal Reserve opposed the further increase in interest rates in the US, on the other hand, yesterday, Fed official William Dudley said that he expects a gradual increase in interest rates of the Fed, as it will be justified due to mild financial conditions.
According to Dudley, the current monetary policy still contributes to economic growth, and reducing the balance of the Fed will only tighten the financial conditions a little. Dudley believes that the Fed needs to raise rates before inflation reaches the target level, because in general, the US economic prospects remain positive.
The Federal Reserve official of the also commented on the weakening of the US dollar, which, in his opinion, would help foreign trade.
Another representative of the Fed, Fed-Cleveland President Loretta Mester, said yesterday that the Fed's plans to reduce the large-scale portfolio of bonds and other assets present a lesser risk of rising yields on long-term US government bonds than the current political uncertainty.
All this points to the different sides of the Fed officials with regard to the future of policy of interest rates, which still creates greater uncertainty and supports the euro and the British pound, where the current monetary policy is more or less clear.
As for the technical picture of the EURUSD pair, it is not recommended to rush to buy at the current yearly highs. Given that Mario Draghi did not say much about the future course of the bond buyback program, the demand for the euro could quickly fade away after an unsuccessful attempt to remain at annual highs. The return to support level 1.2050 could also significantly affect the mood of investors who were counting on a bigger breakthrough and a further upward movement in the European currency after yesterday's press conference of the ECB president.
Returning to buying euros in the short term is best after upgrading the level of 1.2015 or after returning to a larger support of 1.1940, which has been resisting throughout this week. A sharp rise and breakdown of the level of 1.2100 will indicate continuation of the formation of a bullish momentum in the pair.