The European currency continues to rise against the US dollar and several other assets, as statements from European officials—particularly European Central Bank President Christine Lagarde—are still new in traders' minds.
According to Lagarde, the region's economy is in a favorable position because borrowing costs are at an optimal level. "The interest rates we agreed upon at the last meetings are, in my view, set correctly," Lagarde said. "I continue to say that we are in a good position, considering the inflation cycle that we have managed to bring under control."
Investors interpreted these comments as a signal that the European Central Bank does not intend to ease its monetary policy anytime soon, which means the euro will continue to receive support. Additionally, positive macroeconomic data from the eurozone—particularly lower inflation and, albeit modest, GDP growth—also contribute to the strengthening of the European currency. Meanwhile, the US dollar is under pressure from expectations of an imminent rate cut by the Federal Reserve.
Discussing inflation forecasts, Lagarde said the scale of risks has narrowed, but upward pressure on prices may reappear if the US raises tariffs or if supply chains are disrupted. These comments underscore the ECB's satisfaction with recent developments, as consumer price growth is hovering around the 2% target and the economy is coping better than expected with US tariffs. Most officials have indicated that they see no need to adjust borrowing costs at the December meeting.
However, a new quarterly forecast may still prompt discussion if it shows inflation failing to reach the target. The report from the October meeting revealed some concern regarding this scenario, although the policy framework was deemed robust enough to handle shocks.
ECB Vice President Luis de Guindos said last week that he sees only a limited risk of excessively weak price growth, calling the current 2% rate appropriate. Chief Economist Philip Lane emphasized that slowing wage growth should help rein in non-energy expenditures, which continue to rise faster than desired.
Speaking about the economy, Lagarde said that the eurozone's expansion has proved more resilient than anticipated, even though the world is in a phase of transformation. "The situation exceeded our expectations," she said. "At the beginning of 2025, we expect growth of 0.9%, rising to 1.2% by September, and I would not be surprised if growth rates are even higher by the end of the year." Considering Germany's recent difficulties and political tensions in France over the budget, Lagarde expressed hope. "I am definitely an optimist—it's simply my nature," she said. "In a world undergoing change, one must act quickly, remain vigilant, but also stay optimistic. That's why I always see the glass as half full, not half empty."
As for the current technical picture in EUR/USD, buyers now need to consider how to take control of the 1.1630 level. Only this will allow them to target a test of 1.1655. From there, the pair could climb to 1.1680, but doing so without support from major players will be quite difficult. The furthest target would be the 1.1715 high. In the event of a decline, I expect significant buyer activity only around 1.1595. If no one steps in there, it would be best to wait for a retest of the 1.1560 low or consider opening long positions from 1.1530.
