As expected, the ECB left Deposit Rates on hold at -0.5% in Christine Lagarde’s first meeting as President of the ECB, which reiterated forward guidance and that it expects rates to stay at present levels until “inflation outlook robustly converges to a level sufficiently close to, but below, 2%.” The committee also said that they have all tools available to combat low inflation, however they did raise their inflation outlook slightly for 2022 to 1.6%. As a result, there was a pop in many of the EUR pairs, however they were quickly negated. In the Q&A afterwards, Christine Lagarde mentioned that Europe is not near “Japanification,” while proclaiming she is “neither a dove nor a hawk but aims to be a wise owl.”
Source: Tradingview, FOREX.com
The move higher in EUR/GBP could be attributed to the comments, but also the lack of liquidity due to the pending results from Thursday's UK Elections. (Although technicals should never be relied upon to trade in isolation, they should play less of a factor, or even no factor at all)
EUR/USD had a quick pop as well, however on a daily chart, price kissed the 200-day moving average and then pulled back. A close below 1.1135 would form a shooting star, which is an indication of a possible move lower. Also notice how each time over the past 2 months EUR/USD has traded up to 1.1150 it has been rejected. There is also a downward sloping trendline from late September, which comes across near 1.1160. If price can get above those resistance levels, the 61.8% retracement from the June 21 highs to the October 1 lows sits just above at 1.1207.
Source: Tradingview, FOREX.com
Horizonal support comes across at 1.1107 and then the 38.2% and 50% levels from the low on November 29 to Thursday’s highs. Below that, there is horizontal support at 1.1030.
Source: Tradingview, FOREX.com
At the time of writing, it appears a trade deal between the U.S. and China may be finalized. The USD is moving higher and EUR/USD lower. This continues to be a fluid situation.