Euro (FXE) Jumps After ECB Meeting

It seems that currency markets received a strong signal of an upcoming rate hike by the European Central Bank today after some strong comments by the ECB President Jean-Claude Trichet sent the Euro (EUR) flying across the board. Expectations for a rate hike in the near future have already been building up for some time now, and Trichet's press conference after the ECB meeting gave the strongest signal yet that a rate hike might be coming as soon as early April. While the ECB decided to hold the interest rates unchanged at 1% for now, which was highly expected, the strong language used by Trichet about the inflation was the reason for the rally. He assured markets that the ECB is watching the inflation data very closely and will use “strong vigilance” to keep it from rising. Those comments were considered by many analysts and investors as a clear signal to the markets that there is a huge chance of a rate hike at the next ECB meeting in April. After the comments, the Euro rallied against all of the major currencies, including the US Dollar (USD), Swiss Franc (CHF) and Japanese Yen (JPY). The EUR/USD jumped from 1.3835 all the way to 1.3973 the highest level since November of last year and is set to test the 1.40 level, where the currency pair could meet some resistance as it is considered an important psychological level. The EUR/CHF currency pair, meanwhile, soared from 1.2830s to 1.3020 and the EUR/JPY jumped from 113.47 to 115.14 and is still moving higher confidently.