EUR/USD Bulls Eye a Return to $1.11 on the Lagarde Press Conference

It is a big day ahead for the EUR/USD. Early in the European session, German trade data and Spanish unemployment numbers will draw interest. However, barring dire numbers, the stats should have a muted impact on the EUR/USD.

Later in the session, the ECB monetary policy decision and ECB President Lagarde press conference will be the key drivers. With the markets expecting the ECB to lift interest and deposit rates by 50 basis points, the press conference will likely be the market focal point.

ECB members have delivered hawkish statements ahead of today’s policy decision. Inflation remains elevated, while economic indicators have been better-than-expected numbers, allowing the ECB to take more aggressive steps to bring inflation to target. Lagarde’s outlook on inflation, the economy, and monetary policy will influence.

EUR/USD Price Action

At the time of writing, the EUR was up 0.07% to $1.09958. A mixed start to the day saw the EUR/USD fall to an early low of $1.09844 before rising to a high of $1.09960.

Technical Indicators

The EUR/USD needs to avoid a fall through the $1.0947 pivot to target the First Major Resistance Level (R1) at $1.1043 and $1.050. A return to $1.10 would signal a bullish session. However, the EUR/USD would need a hawkish ECB press conference to support another breakout session.

In the case of an extended rally, the bulls will likely test the Second Major Resistance Level (R2) at $1.1097 and resistance at $1.11. The Third Major Resistance Level (R3) sits at $1.1247.

A fall through the pivot would bring the First Major Support Level (S1) at $1.0893 into play. However, barring an ECB-fueled sell-off, the EUR/USD pair should avoid sub-$1.08 and the Second Major Support Level (S2) at $1.0798.

The third Major Support Level (S3) sits at $1.0648.

Looking at the EMAs and the 4-hourly chart, the EMAs send a bullish signal. The EUR/USD sits above the 50-day EMA ($1.08728). The 50-day EMA pulled away from the 100-day EMA, with the 100-day EMA widening from the 200-day EMA, delivering bullish signals.

A hold above S1 ($1.0893) and the 50-day EMA ($1.08728) would support a breakout from R1 ($1.1043) to target R2 ($1.1097) and $1.11. However, a fall through S1 ($1.0893) and the 50-day EMA ($1.08728) would give the bears a run at the 100-day EMA ($1.08301) and S2 ($1.0798). A fall through the 50-day EMA would send a bearish signal.

The US Session

It is a busy day on the US economic calendar. US jobless claims, factory orders, core durable goods orders, and nonfarm productivity and unit labor cost numbers will be in focus. We expect the jobless claims and unit labor cost numbers to have more influence. However, a sharp fall in factory and core durable goods orders could spook investors.