EUR/USD Looks Volatile Above 1.1800, Lagarde’s Presser Underway

Following a move to daily highs around 1.1840 soon after the ECB statement, EUR/USD now embarked on a correction to the 1.1810 region as Chairwoman Lagarde’s presser is underway.

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EUR/USD stays supported near 1.1800

EUR/USD manages well to keep business above the key 1.1800 yardstick after ECB’s C.Lagarde said the rebound of the economic activity in the region is increasingly advanced, adding that the economy could return to pre-pandemic levels by year-end. The ECB expects the economy to expand 5.0% this year, 4.6% in 2022 and 2.1% in the following period. Risks to the growth outlook, in the meantime, comes from the perseverance of the pandemic and/or supply shortages.

Lagarde highlighted the fast improvement in the labour market as well as the cautious stance among consumers, while production remains affected by shortages.

Regarding inflation, Lagarde noted that current higher prices remain temporary and that medium-term inflation is still seen well below the target. The central bank revised higher its inflation projections and now see the CPI at 2.2% in 2021, 1.7% in 2022 and 1.5% in 2023.

At her press conference, Lagarde said the Governing Council unanimously decided on the pace of purchases under the PEPP, although she gave no hints at the moment when the stimulus program could end.

EUR/USD levels to watch

So far, spot is gaining 0.01% at 1.1813 and faces the next up barrier at 1.1909 (monthly high Sep.3) followed by 1.1943 (100-day SMA) and finally 1.2000 (psychological level). On the other hand, a break below 1.1802 (weekly low Sep.8) would target 1.1786 (20-day SMA) en route to 1.1663 (2021 low Aug.20).

Disclosure: Information on this article contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes ...

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