EUR/USD retreats from daily tops to 1.1420s following ECB’s Lagarde appearance at the EU Parliament

• On Monday, the shared currency slides 0.24% post-ECB Lagarde remarks.
• A positive market mood keeps the EUR low-yielder on the wrong foot, while the greenback advanced a touch.
• If the EUR/USD prints a daily close under the 100-DMA, it would add further downward pressure on the pair.

On Monday, the EUR/USD trims Friday’s gains in the New York session, down some 14%. At press time is trading at 1.1424, as ECB’s President Christine Lagarde is crossing the wires in the last hour.

The market sentiment is upbeat, though, in the FX complex, the USD recovers in the day, with the US Dollar Index advancing 0.05%, sitting at 95.55, weighing on the EUR/USD.

ECB President Lagarde appears in the EU Parliament

In her appearance at the EU Parliament, ECB’s President Christine Lagarde said that “inflation is likely to remain high, in the near term.” However, she emphasized that “there is no sign that would measurably exceed the 2% target in the medium term.” Furthermore, she noted that “it will remain above the 2% target, but it would be lower than current levels.”

It seems that in the Q&A session, ECB’s Lagarde down-talked the hawkish tone perceived by market participants on last Thursday’s ECB’s monetary policy pivot. Following Lagarde’s quotes, the EUR/USD retreated from 1.1450s to current levels.

Earlier during the European session, the EU economic docket revealed that German Industrial Production for December shrank 0.3% when estimates looked for a 0.4% increase. Alongside macroeconomic releases, ECB’s officials crossed the wries.

ECB member Klaus Knot said that the bank should end the APP and noted that the first-rate hike in Q4 is possible. Meanwhile, ECB’s Kazaks pointed out that a “July hike would imply an extremely quick and unlikely tapering pace, with an increased risk of persistent inflation net-new asset purchases become less necessary.”

Across the pond, an absent economic docket has EUR/USD traders waiting for US inflation figures on Thursday.

EUR/USD Price Forecast: Technical outlook

The EUR/USD threatens to break below Pitchfork’s top-trendline, around 1.1415-20. In the event of a daily close below it, it would exacerbate a downward move towards Pitchfork’s mid-line but first would need to overcome some hurdles on the way south. The first support would be 1.1400. Breach of the latter would expose a four-month-old upslope trendline around 1.1340-50 region, followed by the 50-day moving average (DMA) at 1.1317.