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EURUSD surges after European Central Bank meeting

Thursday 3 February, 2022

Daily Currency Update

Demand for the US dollar tumbled versus a basket of currencies on Thursday following comments from European Central Bank president Christine Lagarde. The European Central Bank left interest rates unchanged as expected but some market participants took Lagarde's comments as a likely signal for faster monetary policy tightening. Asked if the European Central Bank was "very unlikely" to raise rates this year, Lagarde said the central bank would be "data-dependent" and watch conditions very carefully. This gave a boost to the euro, pushing up EURUSD 1.24% to trade around 1.14403 in the late morning North American session. Data also showed that there was a continued slowdown in the pace of growth in US service sector activity in January. US Services PMI fell to 59.9 in January from 62.3 in December, which was in line with economist expectations. The US Dollar Index was down 0.70%, sitting at around 95.27 at the time of writing.

Key Movers

The pound also climbed against the dollar after The Bank of England hiked interest rates again on Thursday as expected. This is the second time in three months that the central bank raised rates, in an effort to tamp down surging inflation that is squeezing consumers and businesses. The BoE raised borrowing costs to 0.5%, an increase of 25 basis points. Four out of nine of the bank's policymakers pushed for a bigger increase. GBPUSD was up 0.22%, trading at 1.3602 at the time of writing.  

Expected Ranges

  • EUR/USD: 1.1277 - 1.145 ▲
  • GBP/USD: 1.354 - 1.3624 ▲
  • AUD/USD: 0.7111 - 0.7165 ▲
  • USD/CAD: 1.2655 - 1.2713 ▲