EUR/USD drops to 1.2000 after Lagarde as DXY turns positive
|- US dollar gains momentum during the American session as US yields move higher.
- EUR/USD reverses sharply from 1.2070 to test again 1.2000.
The EUR/USD dropped to test 1.2000 during the last hours following Lagarde’s press conference and amid a stronger US dollar. The DXY printed a fresh daily high at 91.35 and then pulled back modestly.
ECB and US data
The European Central Bank (ECB) kept its monetary policy stance unchanged as expected. The euro peaked during the press conference and then pulled back. Analysts at ING point out the ECB delivered no surprises. “The phasing out of PEPP purchases was not discussed, and the exchange rate comments did not stand out. The euro sailed through the meeting unaffected, and the focus now turns to the expected improvement in Eurozone data, which should help to push the undervalued EUR/USD higher this quarter”.
US economic data came in mixed. Initial jobless claims dropped to 547K the week ended April 17, the lowest level in a year, against expectations of a modest increase. The Chicago Fed national activity index rose above expectations in March. On the negative front, Existing Home Sales fell 3.7% last month; forecasts were for an increase.
The US dollar was not affected by the economic numbers. The greenback started to gain momentum after the beginning of the American session when US stocks moved to the downside. Later a rebound in US yields helped the dollar. The 10-year yield stands at daily highs at 1.58%.
Short-term outlook: looking at 1.2000
The EUR/USD is testing the 1.2000 area. A consolidation below the 1.1990 support would suggest a deeper correction ahead with the next decent support at 1.1945/50. On the upside, if the euro holds above 1.2000, it would hold a positive tone. The intraday outlook would favor more gains with a return above 1.2040.
Technical levels
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