EURUSD Soars on Lagarde Speech; ECB Leaves Rates Unchanged

Summary:
• The European Central Bank (ECB) has left its interest rates unchanged, with ECB President Christine Lagarde promising a strategic review in Jan.

The EURUSD is soaring even as the ECB left its refinancing rate unchanged at 0.00%. The new ECB President Christine Lagarde is speaking now, and she has said that there are some signs of stabilization following the slowdown of growth in the Eurozone. She has also mentioned that data being received points towards a continuation of muted inflation pressures. “Risks to growth are tilted to the downside,” she said, adding that the downside risks were “somewhat less pronounced”

Lagarde has also said that the bank would monitor the inflation developments very closely, stressing that a highly accommodative policy would still be needed.

Inflation Outlook for the Eurozone

ECB President Lagarde has also stated in her speech that the inflation outlook of the bank in 2020 is 1.1%, as compared to 1.0% in September. Other takeaways from the outlook picture are as follows:

• 2019 inflation seen at 1.2% vs 1.2% seen in September.
• ECB sees 2020 inflation at 1.1% vs 1.0% seen in September.
• 2021 inflation seen at 1.4% vs 1.5% seen in September.
• ECB sees 2022 inflation at 1.6% in its initial projection.

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Technical Outlook for EURUSD

Thursday’s surge in price action could take the EURUSD to the initial target at 1.11667, which is where the previous double top peaks of October 18 and November 1 are located. Above this area, further resistance lies at 1.12573, the site of previous highs at April 3, May 14 and June 3 are found.

On the flip side, failure to breach the previous double top area could lead to a pullback to the previous neckline price level at 1.10663, with a possible pitstop before then at 1.11023 (previous lows of September 13 and December 5).