EUR/USD climbs to 1.1840, or daily highs, post-ECB
Following a move to daily highs around 1.1840 soon after the ECB statement, EUR/USD now embarked on a correction to the 1.1810 region as Chairwoman Lagarde’s presser is underway. EUR/USD manages well to keep business above the key 1.1800 yardstick after ECB’s C.Lagarde said the rebound of the economic activity in the region is increasingly advanced, adding that the economy could return to pre-pandemic levels by year-end. The ECB expects the economy to expand 5.0% this year, 4.6% in 2022, and 2.1% in the following period. Risks to the growth outlook, in the meantime, comes from the perseverance of the pandemic and/or supply shortages.
Lagarde highlighted the fast improvement in the labor market as well as the cautious stance among consumers, while production remains affected by shortages. Regarding inflation, Lagarde noted that current higher prices remain temporary and that medium-term inflation is still seen well below the target. The central bank revised higher its inflation projections and now sees the CPI at 2.2% in 2021, 1.7% in 2022, and 1.5% in 2023. So far, the spot is gaining 0.01% at 1.1813 and faces the next up barrier at 1.1909 (monthly high Sep.3) followed by 1.1943 (100-day SMA) and finally 1.2000 (psychological level). On the other hand, a break below 1.1802 (weekly low Sep.8) would target 1.1786 (20-day SMA) en route to 1.1663 (2021 low Aug.20).