- EUR/USD decisively breaks below the 1.0900 level.
- The ECB left the policy rate unchanged on Thursday.
- Lagarde said that inflationary pressure has now intensified.
The EUR/USD made a U-turn and is now dipping further into the negative territory around the 1.0850/40 area on Thursday.
EUR/USD accelerates losses below 1.0900
Sellers have now regained the upper hand and are dragging EUR/USD well south of the 1.0900 mark ahead of Lagarde’s press conference.
Indeed, President Lagarde acknowledged that inflationary pressures have now intensified in many sectors, while trade disruptions continue to transform into new shortages. She insisted that the PPP must be completed in the third quarter and that the bank will keep the optionality and flexibility in place.
On inflation, Lagarde noted that energy prices are still expected to remain high for some time and are seen as the main drivers of elevated inflation.
He also noted that wage growth remained subdued. He sees further downside risks to growth and ruled out any liquidity problems in the financial sector. Lagarde also reiterated that a rate hike will follow once the bank completes asset purchases.
Technical levels
So far the pair is down 0.40% at 1.0845 and break below 1.0808 (monthly low Apr 13) would target 1.0805 (low Mar 7 2022) en route to 1.0766 (monthly low May 7 of 2020). On the other hand, the next upside barrier lines up at 1.0933 (weekly high Apr 11) followed by 1.1000 (round level) and finally 1.1120 (55-day SMA).
Source: Fx Street
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