EUR/USD Finding It Difficult to Make Gains Closer to 1.10 After Dovish Lagarde
The picture in financial markets is becoming more mixed as the week gets underway, with the dollar starting to fight back, despite weaker October new home sales yesterday. Earlier in the day, EUR/USD was pushing higher, but it appears to be finding it increasingly difficult to do so as we approach the 1.10 zone.
This pair reached as high as 1.0960 early yesterday in the European session with the USD in retreat but has reversed back down now, falling to 1.0920s after comments from the European Central Bank president Christine Lagarde, made during the testimony before the Committee on Economic and Monetary Affairs of the European Parliament, in Brussels.
We are reluctant to open a long-term EUR/USD buy signal as we get closer to 1.10, so we only opened a short-term trade here and will likely reverse the trade close to 1.10, depending on the price action. Below are the comments from the ECB president:
ECB’s Lagarde Testimony
- Euro area activity has stagnated in recent quarters & likely to remain weak
- ECB observes that Euro area activity has stagnated in recent quarters and is likely to remain weak for the rest of the year.
- Advises that it is premature to start declaring victory in the current economic scenario.
- There are indications of potential job growth slowdown toward the end of the year,
- Emphasizes the need to stay focused on the mandate of price stability, considering various forces affecting inflation.
- Notes that wage pressures remain strong.
- Looking beyond 2024, the ECB’s Governing Council is committed to exploring ways to further decarbonize corporate portfolios.
- Expect the weakening of inflationary pressures to continue.
- States that the medium-term outlook for inflation is still surrounded by considerable uncertainty.
- ECBs Lagarde says the PEPP will be discussed in the not-so-distant future
- We will re-examine a proposal to keep reinvesting until the end of 2024
EUR/USD Live Chart
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