Among the major central bank decisions this week, the ECB is likely to end up as the most straightforward one. Policymakers have been consistent and firm in their messaging, reaffirming a 50 bps rate hike while maintaining a more hawkish rhetoric. That has been enough to keep the euro in a good spot to start the new year and the momentum looks set to continue.
EUR/USD is eyeing a push above 1.1000 now, with buyers also starting to approach its 100-week moving average (red line) at 1.1072 after another solid week of gains so far this week:
That is the next key hurdle for euro buyers to get through after a push above the 50.0 Fib retracement level of the downswing since 2021, seen at 1.0942.
Meanwhile, EUR/GBP is also on the ascend and is starting to look towards fresh highs this year with buyers eyeing the 0.9000 mark:
A divergence in terms of policy management and outlook between the BOE and ECB might just be the trigger for such a push and we could get that as soon as today.
In terms of the euro getting validation from the ECB, I think there's not much to worry as I would expect policymakers to keep reiterating that they are still on the path of 50 bps rate hikes - especially after the inflation data this week.
