The euro rose to a near 4-month high against the U.S. dollar on Wednesday and looked set to extend gains on growing expectations interest rates in the euro zone will rise earlier than those in the United States. By yesterday's close, the EUR rose against the USD, pushing the oft-traded currency pair to 1.3860. The 17-nation currency experience similar behavior against the GBP and closed at 0.8490.
European Central Bank (ECB) policymakers meet on Thursday, and with euro zone inflation well above its target, markets see the central bank sharpening its anti-inflation rhetoric. But gains in the common currency risk a correction as geopolitical turmoil continues to fuel uncertainty and higher energy prices, causing stocks to tumble on Wednesday.
Investors may look for the unusual price volatility to continue in the EUR/USD as the pair attempts to stabilize and find new support and resistance lines. Large price jumps such as these are not commonplace and present terrific opportunities to take advantage of the price swings for large profitable gains.