Weakening demand for the US Dollar on the day has put the EUR/USD in good stead to stage a 3rd day of gains, just as the ECB Chair Christine Lagarde is set to deliver her speech following the ECB’s interest rate decision.
The ECB has left the key refinancing rates unchanged at 0.00%, while the deposit facility and marginal lending facilities were also kept steady at -0.50% and 0.25% respectively. The PEPP was also left intact.
However, the ECB Chair has commented on the rise in inflation, noting that it was a transitory event. She has also indicated that growth risks look more balanced. The ECB has also upped its inflation and GDP projections for 2021, setting them at 1.5% (vs 1.0% in December), and 4.0% (vs 3.9% in December) respectively.
Lagarde has also indicated that the ECB will accelerate PEPP purchases in the next quarter.
Technical Outlook for EUR/USD
The EUR/USD looks set for a further advance and is now challenging the 1.19472 immediate resistance. Price needs to take out this area by a double successive candle penetration to the upside to confirm the breakout. This opens the door for a further advance towards 1.19999. There is also potential that the price could advance towards 1.20890, leapfrogging 1.20549 in the process.
On the flip side, a retest of 1.18927 could be on the cards if the 1.19472 resistance can withstand the bullish onslaught.
EUR/USD Daily Chart