EUR/USD returns gains after hitting 6-month highs on Lagarde’s comments

• The ECB raises rates by 50 basis points, as expected.
• Lagarde mentions that the next rate hike is also likely to be 50 basis points.
• Mixed economic data in the US, stock markets extend their fall.
• EUR/USD pulls back from highs and returns to 1.0670 area after rising to 1.0735.

The EUR/USD jumped to 1.0735, a fresh six-month high, during the press conference of Lagarde, president of the ECB. The Euro is among the best performing currencies on Thursday, while the US dollar lost momentum after mixed US data.

The ECB boosts the yields of the euro zone and the Euro

The European Central Bank (ECB) has raised official interest rates by 50 basis points to the highest levels since 2009. In the statement, the ECB says it expects to continue raising rates, as inflation “remains too high”. During the press conference, the president of the ECB, Christine Lagarde, pointed out that the next rate hikes will remain at 50 basis points.

The ECB President’s comments boosted the Euro in general, not just against the US dollar. The crossing EUR/GBP also hit three-week highs at 0.8700, while the EUR/CHF posted monthly highs at 0.9916.

In the United States, economic data was mixed. On the bright side, initial claims for jobless benefits fell more than expected to 211,000, the lowest level in weeks. November retail sales fell 0.6%, more than the market consensus 0.1% decline. The Philadelphia Fed index recovered from -19.4 to -13.8. The New York Fed Empire index fell from 4.5 to -11.2. Industrial production contracted 0.2% in November, against expectations for a 0.1% expansion.

Despite the fall against the Euro, the dollar remains strong in general due to risk aversion and the stability of Treasury yields. In Europe, yields rise after the ECB meeting. The German 10-year bond yield has risen more than 8% to 2.10%, its highest level in a month.

The divergence between US Treasuries and Eurozone bonds on Thursday is supporting the EUR/USD pair. The pair has moved away from the highs and is hovering around the 1.0680 region, slightly higher on the day, on track for the strongest close since mid-June..

The Euro needs to rise and stay above 1.0700 to keep the doors open for additional earnings. A drop below the 20-hour moving average in 1.0650 it would change the intraday trend from bullish to neutral/bearish. The next key barriers are located in 1.0600 Y 1.0570.

EUR/USD technical levels