One day after the Federal Reserve announced hawkish policy, two other central banks did the same. Following yesterday's CPI data indicated a significant acceleration in price growth in November, the Bank of England surprised markets with an increase to 0.25% at its meeting on Thursday earlier.
The European Central Bank will also announce its policy decisions and the economic outlook on Thursday. The ECB will also publish its forecasts for inflation and growth in the next two years. It is unlikely that ECB interest rates will change until 2023. However, the bank will likely signal a modest tightening of its policy stance by ceasing to purchase free bonds at the end of March.
Business growth in the Eurozone slowed more than expected this month due to restrictions imposed on the Omicron coronavirus variant. IHS Markit's Flash Composite Purchasing Managers Index fell to 53.4 in December from 55.4 in November, its lowest level since March and below forecasts of 54.0.
EUR/USD Attempts To Penetrate One-Month Range
The EUR/USD pair pushed higher in the early European session on Thursday following these developments as the greenback remained weak. The latest PMI data from the Eurozone missed market expectations, but the pair managed to hold up around 1.1300 ahead of the ECB's policy announcements.
EUR/USD has been stuck inside a triangle pattern since November. If the buying forces intensify, the price could move towards the 1.13538-hurdle. A decisive break above this barrier could pave the door to the 200-EMA in the smack of the monthly highs around 1.13808.
On the flip side, if selling pressures prevail, the single currency would meet the immediate support of 1.12328 at the lower edge of the pattern. A sustained penetration below the pattern would further decline to the next barrier at 1.11856.
