EUR/USD: rally extends through 1.0650, next risk is Trump

Currently, EUR/USD is trading at 1.0665, up 0.26% on the day, having posted a daily high at 1.0678 and low at 1.0589.

EUR/USD has bounced hard on the four hour chart and more near term, the rally has recouped practically all of the recent sell-off with overnight trade and while the ECB left rates on hold, as expected, but the more interesting topic was the ECB’s assessment of inflation developments, noted analysts at ING Bank, adding, "Here, the latest increase in headline inflation had led to some speculation among market participants about a possible ECB reaction.

Obviously, Draghi downplayed the latest increase in headline inflation, as – according to him - the increase was mainly a result of higher energy prices. He did not see any signs yet of convincing upward trend in underlying inflation. In our view, the ECB does not consider energy-driven increases in headline inflation a “sustained adjustment in the path of inflation”."

In other words, we will not be seeing tapering any time soon, and analysts at ING joked, that Draghi will only have to calm critics with soothing words from the cockpit once in a while.

EUR/USD levels

Current price is 1.0666, with resistance ahead at 1.0678 (Daily High), 1.0693 (Daily Classic R1), 1.0705 (Monthly High), 1.0705 (Weekly High) and 1.0705 (YTD High). Next support to the downside can be found at 1.0661 (Daily Classic PP), 1.0648 (Hourly 100 SMA), 1.0641 (Hourly 20 EMA), 1.0638 (Daily Open) and 1.0630 (Yesterday's Low). 

Next risk is Trump