The euro maintains its assured leadership, actively strengthening its position relative to the US dollar against the backdrop of hawkish comments made by European politicians who, armed with the first encouraging data and hopes that the economy can avoid a recession, started actively discussing the need for additional interest rate increases in the region.

Klaas Knot, a member of the Board of Governors, stated, "The European Central Bank should continue raising the interest rate by half a point at the next two meetings, and the moment for lowering the pace of increase is still very far away." "In December, we reduced our increase from 75 to 50 basis points; that was sufficient. But as of right now, I believe that we will stick to the same stringent policy framework at least until the summer of this year."

The lawmaker predicted that at some point in the first half of the year, the risks of future inflation will be more evenly distributed. At this point, the ECB will start to approach its next policy decisions with more specificity. Additionally, Knot noted, "There will be a period when we can take another step down from 50 to 25 basis points."

Last week, the hardline head of the Dutch central bank argued in favor of maintaining the ECB's policy tightening, claiming that core inflation is still rising despite the slowdown in the primary index. Not reiterated his remarks over the weekend, predicting a hike in the rate for both May and June without giving an exact figure.

Recall that the deposit rate was increased by 250 basis points to 2% in 2022 and that by summer, economists expect it to peak at 3.25%. However, as price pressure eases and energy prices fall as a result of the warm winter, some ECB officials are pondering the idea of slowing down the rate of tightening.

According to Knot, "with the figures for December, we witnessed the first fall in overall inflation, although this was entirely attributable to the underlying effect of high rates and lower energy prices." "We are concentrating on core inflation, and sadly, there is no positive news there. We will keep raising rates as long as the underlying inflationary pressure does not show any signs of abating."

ECB President Christine Lagarde, who stated at the World Economic Forum in Davos that politicians will continue on their current path, holds a similar viewpoint. The leaders of Finland's and Austria's central banks came to similar conclusions.

The longer and tougher the ECB officials and central bank heads remain, the more likely risky assets will continue to rise in contrast to expectations of the same aggressive policy from the Federal Reserve System. After last year, there has been a gradual beginning of a revival of demand for the euro, the pound, and other alluring and relatively inexpensive currencies and assets.

Regarding the technical analysis of EUR/USD, there is still demand for the single currency, and there is a potential that monthly and annual highs will continue to be updated. To do this, the trading instrument must remain above 1.0870, which will cause it to move to the vicinity of 1.0930. Above this point, you can easily reach 1.0970 and update 1.1000 in the near future. Only the collapse of support at 1.0870 will put more pressure on the pair and drive EUR/USD to 1.0820, with the possibility of dropping to a minimum of 1.0760 if the trading instrument declines.

Regarding the technical picture of GBP/USD, the pound's growth is still going strong. Buyers must sustain their advantage by staying over 1.2390. However, only the breakdown of resistance at 1.2440 will make it more likely that the recovery will continue to the 1.2500 region, after which it will be feasible to discuss a more abrupt move of the pound up to the 1.2550 region. After the bears seize control of 1.2390, it is feasible to discuss the pressure on the trading instrument. The GBP/USD will be pushed back to 1.2340 and 1.2250 as a result, hitting the bulls' holdings.