EUR/USD returned over 1.1650 after President Lagarde said that the phase of higher inflation would last longer than previously thought. Economists at Société Générale expect the pair to extend its bounce on a break above 1.1670/1.1700.
Holding above 1.1570 is crucial for further up-move
“A break above multi-month channel at 1.1670/1.1700 will denote extension in rebound towards 200-DMA at 1.1910.”
“Defending 1.1570 is essential for further up-move.”
“Efforts to walk back market expectations of higher interest rates next year proved in vain. Lagarde explained that the outlook for inflation had not been met for a first-rate increase, implying that markets are ahead of themselves in pricing a 20bp rate increase in 2022.”
“The ECB estimates inflation will keep rising in the short term but there is every reason according to Lagarde to believe that price pressures will fade in 2022.”
