The EUR/USD pair peaked briefly at the 1.20695 price level this Thursday after the European Central Bank left its key interest rates unchanged as widely expected.
This momentum was quickly lost after the ECB Chair Christine Lagarde made some dovish remarks in her press conference following the ECB’s decision. While Lagarde noted some signs of improvement in the Eurozone economy, she noted that the contagion continued to pressure the health sector. Lagarde also said that there had been an increase in the PEPP and that it “will continue to be that way.”
She further dismissed any notion of a tapering of the PEPP, saying it was premature to discuss it and that any reductions would be “data dependent, not based on calendar.”
The EUR/USD shed some weight on Lagarde’s comments, losing 0.04% as of the time of writing.
Technical Outlook for EUR/USD
The dovish comments by ECB Chair Lagarde and the better-than-expected initial jobless claims in the US set the stage for a pause in the upside move of the EUR/USD.
The rejection at the 1.20549 resistance and the formation of a pinbar by the daily candle sets the tone for a price decline towards the 1.20000 psychological support. A break of this price level opens the door towards the 1.19472 support, with 1.18927 and 1.18395 serving as additional support targets.
Only a break of the 1.20549 resistance allows for a further recovery on the pair, with 1.20890 and 1.21792 serving as the immediate upside targets. Additional targets to the north at 1.22416 and 1.22768 become more viable if the EUR/USD ascends beyond 1.21792.