EUR/USD drops further to 1.1680 on Lagarde

Further selling pressure hurts the single currency and forces EUR/USD to drop to new monthly lows around 1.1680. EUR/USD weaker on dovish ECB EUR/USD  |  29/10/2020 14:04
  • EUR/USD accelerates the downside below 1.1700.
  • ECB’s Lagarde said recalibration will look at all instruments.
  • The ECB left unchanged its monetary condition at its meeting.

Further selling pressure hurts the single currency and forces EUR/USD to drop to new monthly lows around 1.1680.

EUR/USD weaker on dovish ECB

EUR/USD extends the drop to levels last seen in late September in the 1.1680 region in response to the dovish tone from Chief Lagarde at her press conference after the ECB left its benchmark interest rate unchanged on Thursday.

Indeed, the pair sheds further ground after Lagarde said the economy is losing momentum at a faster pace and uncertainty keeps weighing on business investment, all adding to the downside risks to the outlook.

Lagarde also hinted at the idea that inflation is expected to remain negative until early next year and that the recovery in the demand is seen putting upside pressure on prices.

Lagarde also said that recalibration will look at all instruments and will be carried out following the central bank’s updates to be released in December. Once again, Lagarde reiterated the need of strong fiscal support to help the economic recovery.

EUR/USD levels to watch

At the moment, the pair is losing 0.43% at 1.1695 and faces the next support at 1.1679 (monthly low Oct.29) followed by 1.1612 (monthly low Sep.25) and finally 1.1495 (monthly high Mar.9). On the other hand, a breakout of 1.1880 (monthly high Oct.21) would target 1.1917 (high Sep.10) en route to 1.1965 (monthly high Aug.18).

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