EUR/USD hits fresh 1-month tops and retreats, fails near 200-DMA
- EUR/USD jumps to fresh one-month tops but fails near 200-day SMA.
- ECB’s new GDP and inflation projections provided a minor lift to the EUR.
- Lagarde’s comments that risk remains tilted to the downside capped gains.
The EUR/USD pair quickly reversed an early dip to the 1.1125 region and jumped to fresh one-month tops, around mid-1.1100s in the last hour, albeit quickly retreated few pips thereafter.
As the post-ECB meeting press conference gets underway, the shared currency picked up some pace in reaction to a minor improvement in the central bank's economic growth forecast for 2019 – now at 1.2% vs 1.1% previous.
Meanwhile, the GDP growth estimate for 2020 was lowered to 1.1% from 1.2% prior and that for 2021 remained at 1.4%. The latest staff projections also included the first forecast for the year 2022, which is estimated at 1.4%.
Adding to this, the ECB also increased its 2020 inflation forecast to 1.1% from 1.0% previously estimated on the back of expected higher oil prices, which provided an additional boost to the common currency in the last hour.
The pair touched an intraday high level of 1.1154, albeit lacked any strong follow-through, rather the uptick faltered near the very important 200-day SMA in reaction to the ECB President Christine Lagarde's dovish sounding comments.
At her first press conference as the ECB President, Lagarde said that risks remain tilted to the downside and that we stand ready to adjust all instruments as needed. Lagarde also asked governments with fiscal space to act.
Despite the pullback, the pair has still managed to hold with modest daily gains and seemed unaffected by a modest US dollar rebound from near four-month lows, rather remains at the mercy of the incoming ECB headlines.
Technical levels to watch