ECB's Makhlouf: We need to get ahead of inflation

The euro initially reacted positively to the ECB's rate hike, but those gains faded quickly as the market focused on the bigger picture. Makhlouf's comments suggest policymakers are becoming increasingly concerned that higher energy costs are spreading beyond the energy sector and into broader inflation.

That reinforces the idea that the ECB may not be finished tightening yet. However, while higher inflation supports further rate hikes, weaker growth prospects and continued Middle East uncertainty are limiting enthusiasm for the euro. At the same time, safe-haven demand continues to support the dollar, making it difficult for EUR/USD to sustain rallies.

For EUR/USD, the initial resistance is seen at 1.1600, while the closest support is positioned at 1.1540.

R1: 1.1600S1: 1.1540
R2: 1.1635S2: 1.1500
R3: 1.1685S3: 1.1470