EURUSD Bull View Remains Following FOMC

Lagarde Warns Over Inflation RisksEURUSD is trading lower through the middle of the week having reversed sharply from yesterday's highs around the 1.0960 mark. The reversal comes despite ECB’s Lagarde warning yesterday that the bank was not yet done with its fight against inflation, signalling that further tightening might still be needed.  Lagarde’s comments come on the back of an uptick in speculation that the bank will begin cutting rates early next year. The ECB chief was keen to warn that inflationary risks remain a key threat and would be carefully monitored by the bank going forward.Fed Pushes Back Against Rate Cut ChatterUltimately, however, it seems the bigger focus was on the FOMC meeting minutes which came a little later on Tuesday. The minutes showed that the Fed was in no way considering rate cuts in the near-future and instead remained focused on ensuring that inflation moved back to its 2% target sustainably. Fed members agreed that monetary policy should remain restrictive until CPI was back down at 2% sustainably. With the Fed still urging caution over two-way risks, the prospect of further tightening is being kept alive. However, looking at current USD action and market pricing, traders have very little belief that further tightening will be seen.US/EZ data DueLooking ahead, EURUSD still has room to move higher through the end of the week if we see fresh USD weakness on incoming data. Unemployment claims, durable goods and UoM sentiment will be on watch today with EUR bulls looking for some solid undershooting to help reignite the rally. PMIS on Friday will be the bigger challenge however given the recent downtrend in eurozone activity data.Technical ViewsEURUSDThe rally has stalled for now into a test of the 1.0937 level. Still, with momentum studies bullish, the focus is on a further push higher while the 1.0785 level holds as support. Above, 1.1126 is the bigger target for bulls ahead of YTD highs above 1.12.