The major currency pair maintains upward momentum on Wednesday. The current EURUSD quote is 1.0950.
President of the European Central Bank Christine Lagarde stated the day before that the ECB is unlikely to be able to declare achieving peak interest rates and the end of the interest rate hike cycle soon. Thus, the foreign exchange market received another clear signal that the ECB will maintain its inclination towards tightening monetary policy.
The ECB will raise the interest rate for the ninth time in a row at its July meeting. The primary aim is still the same – combating inflation.
The US released a large volume of macroeconomic statistics yesterday, which proved to be remarkably interesting. For example, in terms of new home sales in May, the figure rose to 763 thousand houses against April's value of 680 thousand houses. The year-on-year comparison also showed a significant increase. This is interesting: mortgage rates in the US reached 6.79% per annum in May, which is remarkably high for the country. The rise is attributed to uncertainty due to the limits of the US national debt and mixed sentiments in the financial sector. The number of mortgage applications decreased. At the same time, house prices fell to 416.3 thousand USD from 487.3 thousand USD a month earlier.
Consumers are spending because they predict further price increases. Although this provides strong support for the economy now, these statistics can serve as a basis for a new round of interest rate hikes by the Federal Reserve.
The US dollar should be in demand in anticipation of further interest rate hikes, but the euro appears stronger due to greater certainty.