EURUSD Sitting on Support Ahead of Lagarde Speech

Lagarde on WatchEURUSD continues to hold at a key support level ahead of an upcoming speech by ECB chief Lagarde later today. Traders will be keen to see if Lagarde gives any clues as to how the ECB is likely to act at the next rate setting meeting due later this month. The market’s ECB expectations have become more mixed recently. While inflation remains elevated in the eurozone, warranting further tightening, the downward trend in eurozone data is a big concern, with eurozone growth expectations suffering accordingly.Volatility Risks SeenRecent ECB commentary has taken a hawkish skew with several members recently seen voicing their support for further tightening, in line with the residual strength in inflation. Lagarde herself has yet to give a clear signal as to how the bank will act and so today’s comments hold the potential to cause plenty of volatility if Lagarde is seen adding some clarity. With the US market offline for the Labour Day holiday, bigger moves are likely to be see tomorrow as US flows return.Technical ViewsEURUSDThe sell off in EURUSD has seen the market breaking down below the 1.1126 level as well as the rising trend line from YTD lows. The market is currently sitting on support at the 1.0785 level and looks at risk of a break below. If we do move under current support, focus will shift to a test of the 1.0515 level next in line with bearish momentum studies readings.