EUR/USD leaps to tops near 1.1270 post-ECB, now looks to Lagarde

EUR/USD quickly reverses the selling bias and reaches 1.1270.
The ECB keeps interest rates unchanged at its meeting.
ECB’s PEPP size rose by €600 billion and it won’t include junk bonds.

Pablo Piovano FXStreet

EUR/USD has quickly left behind the initial pessimism and jumped to fresh multi-month peaks near 1.1270 in the wake of the ECB event on Thursday.

EUR/USD stronger on ECB

EUR/USD has resumed the upside and reversed the initial negative stance after the ECB left its benchmark interest rates unchanged on Thursday, broadly matching the markets’ consensus.

In addition, the ECB increased the PEPP by €600 billion and it is now expected to run until June 2021. The central bank also noted that junk bonds are not included in the purchase programme, while it plans to reinvest the PEPP holdings until the end of 2022 (at least).

The pair has quickly made a run to the 1.1270/75 band, or fresh 3-month tops soon after the ECB’s decision, shedding some ground afterwards and ahead of the press conference by ECB President Christine Lagarde.

What to look for around EUR

EUR/USD has moved above 1.1250 earlier in the week against the backdrop of the solid mood in the risk universe. As usual, the weakness in the dollar and the positive prospects following the gradual re-opening of economies around the world keep underpinning the investors’ preference for riskier assets. In addition, Germany is planning to pump an extra €100 billion into its economy, which adds to the recently proposed €750 billion aid packaged by the European Commission (EC). Further support for the euro lies as well in the solid position of the region’s current account.

EUR/USD levels to watch

At the moment, the pair is gaining 0.22% at 1.1258 and a breakout of 1.1272 (weekly/monthly high Jun.4) would target 1.1391 (monthly high Jun.13 2019) en route to 1.1412 (monthly high Jun.25 2019). On the flip side, immediate contention emerges at 1.1012 (200-day SMA) followed by 1.0912 (55-day SMA) and finally 1.0870 (weekly low May 26).

Author

Pablo Piovano

FXStreet

Born and bred in Argentina, Pablo has been carrying on with his passion for FX markets and trading since his first college years.

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