The Euro surged to one-week highs on comments from ECB President Christine Lagarde in the press conference after the central bank kept the policy unchanged. The ECB’s remarks about key points were mainly within market expectations that offered fresh boost to the single currency.
Lagarde pointed to incoming economic data that indicate continued recovery, but the process will remain highly dependent on evolution of pandemic which poses strong headwind to recovery.
The central bank will continue with its stimulus programs, closely watch the situation and will be ready to act, using all available tolls.
Regarding GDP growth, the ECB sees growth risks tilted downside and slightly downgraded its outlook, compared to June’s meeting, with 2021 outlook lowered to 5.0% from 5.2% in June and 2022 outlook seen at 3.2% vs 3.3% in June.
Lagarde said that headline inflation is expected to remain negative in coming months, but expected to turn positive in 2021. The ECB shifts its inflation outlook slightly higher in 2021 (1% vs 0.8% in June), while outlook for 2022 remains unchanged at 1.3%.
Lagarde also pointed to receding deflationary risks.
Regarding high Euro’s exchanged rate, Lagarde pointed to negative pressure on prices that it causes and said that the ECB will continue to closely monitor Euro rate.
The ECB’s view is overall in line with expectations of those who expected upbeat view on economic recovery and inflation and that the central bank is not going to take any stronger action in attempt to lower Euro’s exchange rate for now that is supportive for the Euro.
Bulls took control on Lagarde’s remarks and fresh bullish acceleration broke strong technical barriers at 1.1850 zone (converged 10/20DMA’s) and probed through 1.1900 round-figure level, to pressure pivotal Fibo resistance at 1.1912 (61.8% of 1.2011/1.1752 pullback).
Close above 1.1912 would confirm and end of corrective phase from 1.2011 peak and open way for possible renewed attack at cracked psychological 1.20 resistance.
Res: 1.1912; 1.1950; 1.1965; 1.2000
Sup: 1.1881; 1.1850; 1.1813; 1.1797
Signal2forex.com - Best Forex robots and signals
