Christine Lagarde’s Speech Takes Centre Stage as Investor Lookout For ECB’s Policy Initiatives

The newly appointed President of European Central Bank (ECB) took the helm on November 1, 2019, and promised a broad monetary policy review. Her first major speech on Friday will define the approach with which she is planning to meet those promises. ECB has always been under criticism as it has failed to meet its inflation target of close to 2 percent. For future policy initiatives, ECB will need to consider lowering its target regarding inflation as high inflation targets require higher liquidity. With current circumstances it’s highly expensive for the ECB to meet these objectives.

The Eurozone’s economy woe is not the only challenge Lagarde is facing. She will also need to reunite the already divided governing council on several issues including prudence of further interest rate cut, inflation target and boosting the Eurozone’s economy. As for economic indicators, Purchasing Managers’ Indices (PMIs) for major Eurozone economies are also due on Friday. PMIs across Eurozone are expected to show improvement but investors remain cautious ahead of key speeches from other ECB policymakers Luis de Guindos and Yves Mersch.

The Euro remained above the key psychological level of 1.10000 against the US Dollar since November 14. The recent bullish move came as a relief for the Euro as the currency struggled to register a strong resistance against the USD lately. In addition to the speech by Christine Lagarde, the US-China trade deal and Trump’s impeachment inquiry in the US will also play a major role in the future direction of the EURUSD pair.

On the technical side, EURUSD on the 4-Hour timeframe has been following an uptrend since November 14. The price jumped above the key level of 1.10000 and registered the highest level of period under study at 1.10904 on November 18. Bulls managed to keep the price above 1.10000 but failed to close above 1.11000. As of writing, the EURUSD is hovering around 1.10720 with positive (Moving Average Convergence Divergence) MACD and Momentum above the 100 level. The pair is currently trading above the 50 period simple moving average with (Relative Strength Index) RSI above 50 which supports the recent bullish price move. Resistance level lies at 1.10904 while the support level lies at 1.09886. Although bulls are trying to push the price above 1.11000, a close below the psychological level of 1.10000 could strengthen the argument for further bearish movements.

For more information, please visit: FXTM

Disclaimer: This written/visual material is comprised of personal opinions and ideas. The content should not be construed as containing any type of investment advice and/or a solicitation for any transactions. It does not imply an obligation to purchase investment services, nor does it guarantee or predict future performance. FXTM, its affiliates, agents, directors, officers or employees do not guarantee the accuracy, validity, timeliness or completeness of any information or data made available and assume no liability for any loss arising from any investment based on the same.