EUR continues to surge upwards amid expectations of a ECB rate hike in July and September. The European Central Bank is now expected to raise interest rates above zero by late September. Yesterday, the ECB's president Christine Lagarde stated that the APP bond-buying program would be concluded in early very early in the third quarter. "This would allow us a rate lift-off at our meeting in July, in line with our forward guidance. Based on the current outlook, we are likely to be in a position to exit negative interest rates by the end of the third quarter," she said.

Currently, inflation in the Eurozone is four times higher than the ECB's target level of 2%. The regulator's Governing Council is discussing a possible deposit rate increase by 25 basis points in July and September. It will be the first rate hike in more than 10 years.

Last week, the president of the Dutch central bank Klaas Knot floated the idea of a 50 basis point move, if conditions deteriorate. However, according to Lagarde, the regulator should normalize its monetary policy gradually.

Currently the eurozone faces the same issues as other developed nations, including the US . The ECB has decided to increase interest rates when other countries have already begun to provide support for their economies facing recession. Lagarde's comments pushed EUR up, while the yield of Germany's 10-year bonds increased to 0.98%.

Lagarde's statements about a rate hike in July and September has made future ECB plans more clear. A 50 basis points increase in July, which could have rattled the markets, is now unlikely. However, the chances of EUR extending its uptrend are dubious. The ECB's 50 basis point increase by September would still lag behind the monetary policies of other central banks, such as the Federal Reserve and the Bank of England. These regulators have already tightened their monetary policies to quell high inflation. The Fed and the BoE would continue to follow their hawkish course in the future.

"Optionality is important to allow us to re-optimise the policy path as we go, especially as key variables underpinning that path will only become clearer with time," Lagarde said. The ECB's president noted that the EU central bank would continue to develop new monetary policy instruments to support the eurozone's economy.

The euro's upsurge continued early this week. EUR/USD needs to move above 1.0700 to extend its upside. This would allow the pair to move towards 1.0740 and 1.0780. However, the pair is in overbought territory on smaller timeframes, which would complicate matters for bulls. If bearish pressure returns, EUR/USD would have to hold on to 1.0650. A breakout below this level would send the pair downwards to the lows at 1.0600 and 1.0560.

GBP/USD has recently consolidated at 1.2540, the lower boundary of the ascending channel. If the pair breaks above 1.2600 in the short term, it would then move towards 1.2640 and 1.2690. However, a breakout below 1.2540 would put GBP/USD under bearish pressure, opening the way towards the lows at 1.2500 and 1.2450. If this week's statistic data turns out to be weak, the pair would likely test the support at 1.2390.