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EUR Holds Recent Rally Ahead of Critical ECB Decision

  • EUR/USD is holding the entirety of the Wednesday rally ahead of the ECB rate decision later today, keeping markets honed in on the sustainability of any strength above the parity level. ECB's Lagarde will be closely watched later today for any indications of the ECB's plans into year-end. First upside levels in the pair remain the 1.0090 Aug 26 high as well as 1.0029, the 20-day EMA.
  • Antipodean currencies, namely the AUD and NZD, are underperforming ahead of NY hours, putting AUD/USD within range of first support at 0.6699, the Sep 7 Low ahead of the more notable bear trigger of 0.6682.
  • The moves follow an appearance from RBA's Lowe overnight, who retained a dovish tilt in contrasting the bank's approach to policy relative to the more hawkish global central bank policy backdrop.
  • Focus turns to the ECB rate decision and press conference, at which markets remain split in their view as to whether the bank will raise rates by 50 or 75bps. A similar scenario for the Fed's next rate decision raises the importance of a speech from the Fed Chair Jay Powell later today, who speaks shortly after the beginning of the ECB press conference.
  • Additionally, the newly installed UK PM Truss is due to unveil some details on her plan to combat energy bills in the UK, with markets looking for clues on how her strategy could impact the UK Gilt remit going forward.
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