Lagarde's reassurances | 10 Tháng hai 2022

10 Tháng hai 2022, EUR/USD

Lagarde's reassurances

EURUSD trading plan:

Traders took Lagarde's words last week - which were unexpected, as she had earlier all but ruled out a rate hike this year - as a signal the ECB would tighten policy soon, sending borrowing costs soaring across the 19-country euro zone. Government bond yields have held onto their gains even though Lagarde later sought to clarify and soften her meaning. After Lagarde's news conference on Thursday, investors brought forward their expectations for when the ECB will end its bond-buying programme and raise interest rates for the first time since July 2011. Traders expect the former to happen well before year-end and money markets have priced in the ECB's deposit rate climbing all the way back to zero by December, from -0.5% currently. But Lagarde told the European Parliament there was no sign that a "measurable tightening" of policy. This is a negative signal for the European currency.

Investment idea: sell 1.1440 and take profit 1.1375.

David Johnson
Analyst of «FreshForex» company
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