EUR/USD stages a comeback after hawkish Lagarde statement

OctaFx Analyst Team OctaFX

The EURUSD pair rose to the highest level since April 27 after a hawkish statement by Christine Lagarde. In a blog post, she said that the bank was ready to start hiking interest rates in July and exit sub-zero policy in September this year. This statement came as the bloc’s inflation jumped about four times the ECB’s target of 2%. Other ECB officials like the Dutch and German central bank governors said that the bank should start moving in July. The euro also rose after the positive sentiment data from Germany. According to the Ifo Institute, the current assessment rose to 99.5 while business expectations rose from 86.8 to 86.9.

US futures rose on Monday morning after Joe Biden said that the government was weighing ending the China sanctions that were placed by Donald Trump. The tarrifs are under review and could be removed in the coming month. Trump implemented those tariffs hoping they would incentivise more foreign companies to invest in the US. He also wanted to narrow the trade deficit with China. However, in the past few years, the trade deficit with China has been widening. Biden’s goal for removing sanctions will be to lower the cost of products.

The GBPUSD pair rose slightly even after the relatively weak housing data by Rightmove. The company said that home prices rose to a new record high for the fourth straight month. The house price index rose by 2.1% in May, the highest it has been since April 2014. However, growth is slowing, signaling that demand is starting to reduce. The data also showed that the average mortgage payment was higher than the average rent cost. The housing data came a few days after the US published strong retail sales and inflation data.

EUR/USD

The EURUSD pair rose sharply after the bullish statement by Christine Lagarde. The pair rose to a high of 1.0671, which was the highest level it has been since April. It has moved along the upper side of the Bollinger Bands while the Relative Strength Index (RSI) and the Commodity Channel Index (CCI) have risen to the overbought level. Therefore, the pair will likely keep rising as bulls target the key resistance at 1.0730.

GBP/USD

The GBPUSD pair rose to a high of 1.2580, which was the highest level since May 5. The pair managed to move above the important resistance level at 1.2400, which was the highest level since May 13. It also crossed the important resistance at 1.2500. The pair has moved above the 25-day moving average while the Relative Strength Index (RSI) is approaching the overbought level. Therefore, the pair will likely keep rising as bulls target the resistance at 1.2625.

AUD/USD

The AUDUSD pair rose as investors reflected on the weekend Australian election. It rose to a high of 0.7121, which was the highest point since May 10. The pair has moved above the dots of the parabolic SAR while the Relative Strength Index has moved close to the overbought level. It has also moved close to the 38.2% Fibonacci retracement level. The pair will likely keep rising.

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OctaFx Analyst Team

OctaFX

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