The EURUSD currency pair traded sideways after releasing the latest European Central Bank (ECB) governing council’s monetary policy minutes. The pair traded flat after the ECB minutes revealed that while many policymakers supported a 75 basis points rate hike in December, some favoured a 50 basis points rate hike.
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The pair had been trading sideways leading up to the event and continued to do the same after the minutes were released. The ECB Governing Council also noted that despite the weakening economic conditions in the region, inflation remained significantly elevated.
The minutes hinted that the ECB would raise interest rates by 75 basis points, which was widely expected; hence, the muted reaction from investors. However, the ECB warned that it could quickly change its policy stance if the region fell into a deep recession.
The EURUSD currency pair’s lack of movement could also be attributed to the closure of the US markets as the country celebrates Thanksgiving. The lack of market liquidity could be another significant reason for the pair’s sideways trading.
The FOMC meetings released yesterday also played a role in the pair’s price action after the US Federal Reserve board of governors agreed to slow down the pace of rate hikes starting in December. Investors were happy to see the Fed embrace change after many months of aggressive rate hikes.
Earlier today, the German IFO business climate index rose to 86.3 in November, beating analysts' estimates of 85.0. The data shows investors and businesses were optimistic about the country’s economy despite the harsh winter.
All these factors should have lifted the euro, causing it to rally against the dollar, but this was not the case as the single currency struggled to post gains against its US peer. The pair’s weak reactions show an absence of buyers, which could encourage sellers to step in and push EURUSD prices lower in the coming days.
*This is not investment advice.
EURUSD price chart.
The EURUSD currency pair is up slightly (+0.16%) at the time of writing.
