EUR/USD Forecast: Lagarde lifts the euro above resistance with stimulus boost, levels to watch
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UNLOCK OFFER- The ECB added €500 billion to QE and will run the program into 2022.
- Weak language on the exchange rate also boosts the euro.
- Thursday's four-hour chart is pointing to further gains.
Printing money is good for the currency – at least when it is the euro. This 2020 logic, which differs from the pre-pandemic devaluation one, is boosting the common currency. The European Central Bank added €500 billion to its Pandemic Emergency Purchase Program, as expected, but surprised by extending the scheme all the way to March 2022.
Investors were also comforted by the lack of language change regarding the exchange rate. The ECB copy-pasted the statement from November. Christine Lagarde, President of the ECB, was only marginally more dovish in her press conference, responding to a question by saying the bank is monitoring the euro "very carefully."
She also stressed that the Frankfurt-based institution has the option to cut rates, a specter that scares markets, but that option is always there – it was not an imminent hint of action. Overall, the ECB delivered on its promises without trying to lower the euro – a win-win for EUR/USD.
See ECB Quick Analysis: Lagarde shows her love for markets and the euro, more EUR/USD gains likely
Outside the main event of the day, US weekly jobless claims leaped to 853,000, a worrying sign from the world's largest economy. The data may push Congress to agree on a stimulus package, yet negotiations have yet to yield fruit.
While talks in Washington carry some optimism, pessimism has settled over Brexit deliberations. The EU laid out contingency plans after Wednesday's summit failed to bring about a breakthrough. The new deadline is Sunday. Despite preparations for a no-deal, investors believe some agreement will eventually be fudged.
Overall, the ECB has given a boost to the euro, and other developments – mixed in general – allow the rally to run.
EUR/USD Technical Analysis
Euro/dollar has recaptured the broken uptrend resistance line and momentum on the four-hour chart has turned positive. The currency pair bounced off the 50 Simple Moving Average, another bullish sign.
Resistance awaits at 1.2150, which was a swing high earlier this week, and the bigger prize is the 2020 high of 1.2177. The next levels to watch are 1.22 and 1.2250.
Support awaits at 1.21, 1.2075, 1.2060, and 1.2245 which all were stepping stones on the way up.
- The ECB added €500 billion to QE and will run the program into 2022.
- Weak language on the exchange rate also boosts the euro.
- Thursday's four-hour chart is pointing to further gains.
Printing money is good for the currency – at least when it is the euro. This 2020 logic, which differs from the pre-pandemic devaluation one, is boosting the common currency. The European Central Bank added €500 billion to its Pandemic Emergency Purchase Program, as expected, but surprised by extending the scheme all the way to March 2022.
Investors were also comforted by the lack of language change regarding the exchange rate. The ECB copy-pasted the statement from November. Christine Lagarde, President of the ECB, was only marginally more dovish in her press conference, responding to a question by saying the bank is monitoring the euro "very carefully."
She also stressed that the Frankfurt-based institution has the option to cut rates, a specter that scares markets, but that option is always there – it was not an imminent hint of action. Overall, the ECB delivered on its promises without trying to lower the euro – a win-win for EUR/USD.
See ECB Quick Analysis: Lagarde shows her love for markets and the euro, more EUR/USD gains likely
Outside the main event of the day, US weekly jobless claims leaped to 853,000, a worrying sign from the world's largest economy. The data may push Congress to agree on a stimulus package, yet negotiations have yet to yield fruit.
While talks in Washington carry some optimism, pessimism has settled over Brexit deliberations. The EU laid out contingency plans after Wednesday's summit failed to bring about a breakthrough. The new deadline is Sunday. Despite preparations for a no-deal, investors believe some agreement will eventually be fudged.
Overall, the ECB has given a boost to the euro, and other developments – mixed in general – allow the rally to run.
EUR/USD Technical Analysis
Euro/dollar has recaptured the broken uptrend resistance line and momentum on the four-hour chart has turned positive. The currency pair bounced off the 50 Simple Moving Average, another bullish sign.
Resistance awaits at 1.2150, which was a swing high earlier this week, and the bigger prize is the 2020 high of 1.2177. The next levels to watch are 1.22 and 1.2250.
Support awaits at 1.21, 1.2075, 1.2060, and 1.2245 which all were stepping stones on the way up.
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