11:55, 04 July
Returns to Key 1.13 Level as IMF’s Lagarde Nominated as Next ECB President
In the last few days the EURUSD has reversed and fallen strongly back to the key 1.13 level and drifted a little lower. It had enjoyed a solid surge higher from support at 1.12 back to the 1.13 level before breaking higher and reaching a three month low just above 1.14. For the most part of this year the EURUSD has traded in a range between 1.11 and 1.13 with very few excursions outside and after its recent decline, it remains within this range.
Over the last couple of months the EURUSD has been well supported by the 1.11 level and on several occasions it appeared as if the currency pair was poised to move through this level to a two year low. In doing so, it continued to achieve lower peaks and lower troughs which is why it looked perfectly setup to threaten the recent troughs around 1.11.
Given the strong medium term down trend, the recent surge higher to the three month high is significant. Back in April, the EURUSD attempted to climb back above the key level of 1.13 and after meeting resistance there for around a week, it was thwarted and sold off reasonably strongly falling to the two year low. In early February the EURUSD was sold off after running into resistance at the other key level of 1.15, and it maintained a trading range between 1.13 and 1.15 for the most part of the last six months.
With the recent break higher, it may look to resume this trading range and in due course, make another attempt at 1.15. On numerous occasions earlier this year, the EURUSD enjoyed rock solid support from the key 1.13 level however it is currently repelling prices lower. It is interesting to note that its excursion above 1.15 earlier in the year didn’t last long as it was quickly sold down at those three month highs.
Christine Lagarde, managing director of the International Monetary Fund (IMF), has been officially nominated by the European Council to replace Mario Draghi and become the next president of the European Central Bank (ECB). She's been managing director of the IMF since 2011 and is a lawyer by training, having previously served as France's finance minister. In her position at the IMF, she is a frequent commentator on global economic matters, and last year, Forbes ranked her third on its list of the world's most powerful women. “I am honored to have been nominated for the Presidency of the European Central Bank,” Lagarde said in a statement. “In light of this, and in consultation with the Ethics Committee of the IMF Executive Board, I have decided to temporarily relinquish my responsibilities as Managing Director of the IMF during the nomination period.” Whomever the next ECB president is, they will need to tackle a tough situation with global economic growth weakening, as Lagarde herself has warned for months. "The global economy has hit a rough patch: investment has weakened and trade has slowed significantly, with export and import growth rates at their lowest level since the great financial crisis," she said last weekend at the G20.