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EUR/USD spikes as the ECB hikes rates

Kitco Media
By Rajan Dhall
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(Kitco News) - The European Central Bank surprised some traders and analysts this morning as it hiked its key interest rate by 50bps vs the 25bps that the market had been expecting.

The 30-min chart below shows the price of EUR/USD climb around 77 pips in a matter of seconds after the announcement was released.

In other markets, gold pushed higher as the dollar weakened across the board. The German Dax index fell slightly in a short-term reaction but the losses have now been pared.

Focusing on the chart below, the 38.2% Fibonacci retracement area could be a sticky zone but the stronger area lies above closer to 1.0350. There was much made of the pair being at parity as the ECB lagged behind the Fed in terms of policy normalization but could this be the point where the ECB catches up?

Kitco Media

Rajan Dhall

Rajan Dhall is a financial analyst that has been in the trading industry since 2009. From working in Canary Wharf (London) as a head trader to becoming a journalist on a real-time news desk, Rajan has worked his way through many positions in the financial sector. The main area of Raj's expertise lies in technical and statistical analysis. Rajan currently lectures technical analysis with the Society of Technical Analysts (STA) at the London School of Economics. One of the main areas Rajan has based his analysis on is probability. Raj completed his certification (probability) with Harvard and regularly uses probability theories in his analysis as he feels it helps him add value to his clients and customers.

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