ECB Continues Rate Hikes Amid Middle East-Driven Inflation Shock

The ECB's continued interest rate hikes in response to the Middle East-induced inflation shock could negatively affect global risk appetite and create selling pressure in stock markets. The high interest rate environment may accelerate capital outflows, especially from emerging markets, and put depreciation pressure on the Turkish lira. However, if the ECB's determined stance helps anchor inflation expectations, market volatility may decrease in the medium term. In the short term, fluctuations in TL assets and an increase in risk premiums may be observed.

While the ECB's continued rate hikes serve as a fundamental support factor for the EUR, the market may have largely priced this in. Technical indicators are mixed: RSI at 39 is near oversold territory, but MACD is below the signal line and the price is slightly below the SMA20/50. In the short term, if the 1.1600 support holds, reaction buying may be seen, but unless the 1.1650 resistance is breached, the upside may remain limited. Inflation shock risks originating from the Middle East could suppress risk appetite and limit EUR gains. Overall, I expect a moderate upward trend, but volatility may be high.

While the ECB's rate hike is generally a positive signal for the EUR, the news headline focuses on a Middle East-driven inflation shock and includes a geopolitical element that could dampen risk appetite. EURTRY technical indicators are mixed: RSI at 47 is in neutral territory, MACD is below its signal line (0.010 vs 0.027) indicating weak momentum, and the price is moving sideways just below the SMA20 and SMA50. The 24-hour change is only 0.16%, suggesting the market has not yet reacted strongly to the news. In the short term, the direction is uncertain; although the ECB's hawkish stance supports the EUR, the inflation shock and geopolitical risks could create volatility in favor of the TL. Therefore, I foresee a neutral outlook for the next 1-3 days.

Brent crude rose 4% in the last 24 hours to reach 104.68, with its RSI at 72, placing it in overbought territory. The ECB's continued interest rate hikes in response to a Middle East-driven inflation shock indicate that the central bank confirms upward pressure on energy prices. The MACD is above its signal line and positive, with short-term momentum still favoring buyers. However, overbought conditions and potential profit-taking could limit upside potential. In the 1-3 day outlook, the upward trend may persist, but volatility could be high.