ECB's Lagarde Call For Further Interest Rate Tightening
Lagarde Leans Into Tightening Mode
Following on from the dovish comments heard from Fed’s Powell on Friday, ECH head Christine Lagarde struck a different tone during an interview on Sunday. Lagarde was seen to continue pushing ahead with further tightening. While Lagarde noted that the central bank had “covered a large chunk of the journey towards taming inflation” she warned that inflation remains too high and cited the need for further tightening in order to bring inflation down. Looking ahead, Lagarde noted that there is a lot of uncertainty in the bank’s outlook adding that “So many things can go wrong that we cannot give what we call forward guidance.”
Pushback Against ECB Pause Speculation
There has been a growing level of speculation recently as traders look to gauge likely pause from the ECB, in line with what we’ve seen from many other central banks. However, Lagarde was decisive in her call on further tightening, saying “We are not done yet, we are not pausing based on the information I have today.” Given the recent correction lower we’ve seen in EUR the question now is whether Lagarde’s remarks will prove enough fuel to start a new rally ahead of the June ECB meeting.
Technical Views
EURUSD
The correction lower in EURUSD has seen the pair trading down to test the bull channel lows and structural support at 1.0785. This is a key level for the pair and bulls need to defend the area to keep the broader upside view intact. Should we break below here, 1.0676 is the next support ahead of a bigger level at 1.0515. Notably, we also have a bullish buy order in the Signal Centre currently at 1.0717 targeting mid 1.83s initially.
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With 10 years of experience as a private trader and professional market analyst under his belt, James has carved out an impressive industry reputation. Able to both dissect and explain the key fundamental developments in the market, he communicates their importance and relevance in a succinct and straight forward manner.