Ella 
During the Asian session on Friday, EUR/USD fluctuated below the mid-1.0600 level, consolidating the trend that fell to a six-month low after the European Central Bank raised interest rates the day before.
The European Central Bank (ECB) chose to raise interest rates by 25 basis points on Thursday, its 10th consecutive hike, and raised the key interest rate to a record high of 4% to combat stubbornly high inflation. However, the European Central Bank lowered its economic growth and inflation forecasts for next year, temporarily shelving the possibility of further interest rate hikes. This is therefore seen as a key factor weighing on the euro and the EUR/USD currency pair.
On the other hand, the dollar is trading below its highest level since March 8 hit on Thursday and is well supported by growing expectations that the Federal Reserve (FED) will maintain a hawkish stance. U.S. inflation data released on Wednesday suggested the Federal Reserve will keep interest rates steady at its upcoming monetary policy meeting next week. However, inflation remains firm, leaving the door open for the Fed to raise interest rates again before the end of the year.
Improved U.S. macro data on Thursday further fueled market bets that the U.S. economy is vibrant and that the Federal Reserve should be able to maintain higher interest rates for longer. That said, market risks are generally actively discouraging traders from placing aggressive bullish bets on the safe-haven US dollar and providing some support for EUR/USD. However, the fundamental backdrop suggests that there is still minimal resistance to the downside for EUR/USD.
Therefore, any attempt to rebound in EUR/USD may still be viewed as a shorting opportunity and remain capped. Currently, traders are focusing on macro data from China, which could affect broader risk sentiment. Traders will also further focus on a scheduled speech by European Central Bank President Christine Lagarde. In addition to this, Friday’s US macro data – the Empire State Manufacturing Index and the preliminary Michigan Consumer Confidence Index should provide some momentum for EUR/USD.
