EUR/USD challenges daily lows near 1.0840 on ECB, Lagarde

• EUR/USD decisively breaks below the 1.0900 level.
• The ECB left the policy rate unchanged on Thursday.
• Lagarde said inflation pressure have now intensified.

EUR/USD made a U-turn and now sinks further into the negative territory around the 1.0850/40 band on Thursday.

EUR/USD accelerates losses below 1.0900

Sellers have now regained the upper hand and drag EUR/USD well south of the 1.0900 mark as Lagarde’s press conference is under way.

In fact, Chair Lagarde acknowledged that inflation pressures have now intensified across many sectors, while disruptions in trade keep morphing into new shortages. She insisted that the APP should conclude in Q3 and that the bank will keep the optionality and flexibility well in place.

On inflation, Lagarde signalled that energy prices are still expected to remain high for some time and are seen as the main drivers of the elevated inflation. She also noted that wage growth remained muted.

Lagarde now sees increased downside risks to growth and ruled out any liquidity issues in the financial sector.

Lagarde also reiterated that a rate hike will occur once the bank completes the asset purchases.

EUR/USD levels to watch

So far, spot is down 0.40% at 1.0845 and the break below 1.0808 (monthly low April 13) would target 1.0805 (2022 low March 7) en route to 1.0766 (monthly low May 7 2020). On the flip side, the next up barrier aligns at 1.0933 (weekly high April 11) seconded by 1.1000 (round level) and finally 1.1120 (55-day SMA).