- EUR/USD pulls back from daily highs, positive for the day.
- In minutes, the decision of the European Central Bank.
- Further ahead: Lagarde’s post-decision conference and US data.
The EUR/USD is trading quietly just above 1.0900 ahead of the European Central Bank’s decision (ECB). Hours ago the pair reached as high as 1.0923, the highest level since Monday, before pulling back modestly.
At 11:45 GMT the decision of the ECB will be known. No changes in the interest rate are expected, but a message of a firmer adjustment to the rise in inflation is expected. At 12:30 GMT, Christine Lagarde will give a press conference. will be published at the same time US retail sales and jobless claims data.
According to analysts at TD Securities, the ECB’s message is likely to turn towards rising inflation in the region. “We hope that the Government Council will announce that the APP (purchase program) will end at the end of May and modify its language to give them more breathing room to raise (rates) in June (which we hope will happen). The language at the March meeting gave them ample room to tighten policy if inflation rose sharply, and it is currently almost 2 percentage points above their forecasts from just a few weeks ago,” the analysts explained.
The volatility of the euro crosses could rise significantly at the time of the publication of the statement and later with the Lagarde conference.
Price zones to consider
The EUR/USD heads into the ECB meeting bouncing off critical support at the 1.0800 area. The gains lost steam above 1.0900, although the euro has remained above. Initial resistance to break to strengthen the common currency is seen at 1.0940. A statement above could trigger an extension to the 20-day moving average at 1.0970.
Before 1.0800, there are two relevant supports: 1.0870 and 1.0845. Losing the March and April floor could give rise to a downward acceleration. The first barrier below can be seen at 1.0760.
Technical levels
Source: Fx Street
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