- EUR/USD gained some strong positive traction for the second consecutive session on Thursday.
- Lagarde’s comments on the recent euro strength provided a strong boost to the shared currency.
- The heavily offered tone surrounding the USD remained supportive of the ongoing momentum.
The EUR/USD pair added to its strong intraday gains and jumped to over one-week tops, around the 1.1915-20 region in the last hour, albeit retreated few pips thereafter.
The pair built on the previous day’s bounce from the vicinity of mid-1.1700s, or near one-month lows and gained some strong positive traction for the second consecutive session on Thursday. The shared currency got an additional after not so dovish remarks by the ECB President Christine Lagarde.
During the post-meeting press conference, Lagarde said that there is no need to overreact on the euro’s recent appreciation. Lagarde further added that the ECB doesn’t target FX rate but will still be monitoring the exchange rate and its potential impact on the inflation/price stability.
The ECB also released its updated economic projections and now expects a slightly smaller drop in the gross domestic product (GDP) this year, at -8.0% as against the -8.7% forecasted in June. This, in turn, prompted some additional short-covering and pushed the EUR/USD back above the 1.1900 mark.
The momentum was further supported by the heavily offered tone surrounding the US dollar, which remained depressed following the release of higher-than-expected US Initial Weekly Jobless Claims. Even a sharp intraday turnaround in the US Treasury bond yields did little to impress the USD bulls.
It will now be interesting to see if the EUR/USD pair is able to capitalize on the strong positive move or witness some profit-taking at higher levels. Nevertheless, bulls might now wait for some strong follow-through buying beyond the 1.1935-40 supply zone before placing fresh bets.
Technical levels to watch
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