EUR/USD Daily Technical Analysis – 19 January
EUR/USD moving towards 1.08500 after positive comments from Lagarde
In Thursday’s trading session, EUR/USD continued its previous day’s upside momentum and retook the area above the 1.08300 level. The most traded currency pair was getting strength from many factors. On top of factors were the weak USD Index and positive comments from ECB President Christine Lagarde.
Right before the start of the American trading session, the pair experienced some correction. It seems like the traders have already priced-in the Lagarde’s optimistic speech. The USD Index was down on Thursday with -0.09% at 102.26, giving EUR bulls a reason to push its prices higher.
Furthermore, the Euro gained after ECB President Christine Lagarde said that the economy would be much better than feared this year. At the World Economic Forum in Davos, Lagarde addressed that the past few months have provided positive economic news. She further stated that the talks of recessions in the European economy had been shifted to small contraction talks. She continued that the biggest European economy, Germany, was possibly escaping the contraction.
She concluded that maybe this 2023 year would not be brilliant, but it would be much better than what they had feared. The most common reason behind this optimism was the falling energy prices that skyrocketed last year amid the Ukraine-Russia war. However, Lagarde also warned that the inflation level was still too high despite the energy price fall.
She also confirmed that the course of an interest rate hike would stay on track, boosting EUR prices. The positive comments from Lagarde added a spark of hope and raised optimism.
EUR/USD Daily Technical Analysis
As the European Trading session came to an end, the traders started closing their position to take profits. As a result, the pair started to drop in what appeared to be a price correction. However, after the price touched the 20-period Exponential Moving Average, it seems like it is trying to recover the losses. If the pair succeeds in holding this support level, it might keep moving higher to recover all the losses of the previous hours.
However, the 200-EMA is acting as a crucial resistance level at 1.08300 level. Any break above this level might trigger a heavy bullish price action. On the other hand, any break below the 20-EMA line might cause the pair to lose more in the coming hours.
The Unemployment Claims from the USA are still yet to release, which might provide volatility in EUR/USD prices for the rest of the trading hours.
Daily Technical Levels
Pivot Point: 1.0815