EUR/USD Supported by Lagarde’s Comments, Sell-Off Limited Near 1.1330-1.1350

Lagarde’s Hawkish Tone Supports EUR/USD

ECB President Christine Lagarde’s recent comments shocked markets by indicating the easing cycle is nearing its end, strengthening the euro’s outlook.

EUR/USD Reacts to Lagarde’s Message

Following Lagarde’s remarks, EUR/USD tested the 1.1500 level, highlighting market sensitivity to ECB signals. The market adjusted expectations with the terminal rate priced 11 basis points higher, and the one-month EUR ESTR forward rate rising to 1.71%, exceeding the mid-April record of 1.40%.

Limited Downside for EUR/USD Near 1.1330-1.1350

Despite the hawkish tone, market consensus still anticipates a 25 basis points ECB rate cut later this year, now pushed to October. ECB’s confidence in modest growth through 2026 and 2027 supports a modestly euro-positive outlook.

EUR/USD’s sell-off is expected to be capped near the 1.1330-1.1350 support zone, provided US economic data does not deteriorate significantly. A strong set of US data would likely prevent EUR/USD from breaching this level, while only extremely poor US data might push the pair below it.

Key Levels to Monitor for EUR/USD

LevelType1.1575April High (Resistance)1.1500Near-term Resistance1.1330-1.1350Support Zone

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