Christine Lagarde's statements boost euro's value

Euro continues to strengthen against major currencies, including the US dollar

The euro has been consistently strengthening against most major currencies, and there has been a noticeable increase in its value against the US dollar. At the start of yesterday's trading session, the euro rose slightly against the US dollar and was trading near $1.0970.

During an International Monetary Fund meeting last Friday, Christine Lagarde, the President of the European Central Bank, stated that inflation in the Eurozone is expected to continue to decline. The bank's monetary policy tightening will also weaken demand, but Lagarde expressed optimism that core inflation will be supported by wage growth, which would mitigate the impact of high inflation on the labor market. This would support the gradual return of core inflation to levels close to the bank's target. Lagarde also added that the Eurozone's economic activity is likely to grow in the coming quarters due to a strong labor market, enhanced supply chains, and low inflation rates.

The markets are anticipating the release of the Purchasing Managers' Index for services and manufacturing in the Eurozone at the end of this week. Analysts expect both sectors to continue their recovery after being heavily impacted recently.

Analysis of EUR/USD levels and potential movements

The EUR/USD pair is currently moving within an upward channel, having tested the lower limit of the channel at 1.0905 and rebounded to trade around 1.0955. The upward movement is expected to continue and test the level of 1.1075, which represents the highest peak for the euro. If the pair exceeds this level, the upward trend may extend to test the upper limit of the channel at the level of 1.1120.

However, if the euro declines and tests the important support level of 1.0900, and subsequently breaks it, it is highly likely that the downward trend will extend to test the support level of 1.0830. Maintaining the support level of 1.0830 is crucial to prove the intention to rise in the medium term. If this support level is broken, it is likely to contribute to further downward movement of the euro, testing the support level of 1.0730.

These pivotal levels will be important to monitor as they could affect the movements of the EUR/USD pair. Traders should keep a close eye on the trend and price action to make informed trading decisions.