ECB’s hawkish comments lift euro

The euro was higher than its major counterparts in Monday’s European session, as a European Central Bank policymaker suggested the central bank plans to raise rates by 50 basis points in February and March to control inflation in the region.

In an interview with Dutch TV channel WNL on Sunday, ECB board member Klaas Knot said increases of half a percentage point in borrowing costs could be expected for February and March meetings.

If the ECB isn’t done with this, there will be something to follow in May and June and so on, Knot added.

Olli Rehn, who is Governor of the Bank of Finland and a member of the Board of Governors, said there was room for a significant increase in interest rates this winter and next spring.

Investors are awaiting a speech from ECB President Christine Lagarde at Deutsche Börse’s annual reception in Eschborn later today for further clues on the policy outlook.

The euro hit 1.0029 against the franc, its highest level in a week. If the Euro rises further, 1.05 is likely seen as its next resistance level.

The euro rose to a 6-day high of 0.8815 against the pound and near a 2-week high of 142.08 against the yen, from its first lows of 0.8752 and 140.47, respectively. The Euro should face resistance around 0.90 against the Pound and 145.00 against the Yen.

The euro hit an over-9-month high of 1.0927 against the greenback around 2:05 a.m. ET, but has since fallen to 1.0873. The currency should face support around the 1.06 region, if it falls again.

The euro fell to 1.6736 against the kiwi and 1.5536 against the aussie, after hitting 1.6872 and 1.5641 respectively in early trades. The euro could challenge the support around 1.63 against the kiwi and 1.53 against the aussie.

The single currency fell to 1.4524 against the loonie, after an early high of 1.4600. The next possible support for the Euro is around the 1.42 level.

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