Lagarde post on ECB blog clarifies policy normalisation; EURUSD bid but overbought


A blog post by ECB President Christine Lagarde clarifies the central bank's path to normalisation. In the post, she makes the following points:

  1. APP to end very early in Q3.
  2. Rate lift-off at July meeting.
  3. Be able to exit negative interest rates by the end of Q3.
  4. To be guided by inflation after that.
  5. Challenging to determine ex-ante, but if inflation stabilises at 2%, the ECB will normalise rates towards neutral.
  6. If inflation is overheating, the ECB will raise rates sequentially to above neutral.
  7. Supply shocks complicate the situation, introducing uncertainty.
  8. Guided by price stability mandate to deliver 2% inflation over the medium term.
  9. ECB will take whatever steps are needed.

The EURUSD is bid following the release of the blog post. However, the hourly RSI is overbought (green square), implying a ceiling to further gains. To this end, the R3 pivot is the next level of resistance. To overcome this, the stochastic needs to remain above 80 (blue rectangle), signalling that bullish momentum hasn't waned into the overbought condition.

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Russell Shor

Senior Market Specialist

Russell Shor joined FXCM in October 2017 as a Senior Market Specialist. He is a certified FMVA® and has an Honours Degree in Economics from the University of South Africa. Russell is a full member of the Society of Technical Analysts in the United Kingdom. With over 20 years of financial markets experience, his analysis is of a high standard and quality.


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