EURUSD Rallies on Hawkish ECB Comments

Further ECB Tightening NeededEUR is rallying today against a backdrop of fresh, hawkish commentary from ECB chief Lagarde. Speaking at the opening of the ECB’s Sintra Symposium, Lagarde warned that rates need to be brought higher in order to bring inflation down. Echoing previous comments, Lagarde stressed the need to bring rates into sufficiently restrictive territory in order to drive inflation sustainably lower and cautioned that in the near future, it is unlikely the bank will be able to say with confidence that peak rates have been achieved.Increased HawkishnessThese comments represent a hawkish uptick from the latest ECB meeting and have turned focus once again onto ECB rate expectations. With the bank clearly committed to pressing ahead with further tightening, EUR looks likely to remain underpinned near-term, despite recent data weakness. With further comments to come this week from Lagarde, EUR looks vulnerable to upside risks on any further hawkish sentiments.Technical ViewsEURUSDThe rally in EURUSD has seen the market breaking back above the 1.0785 level and testing the underside of the broken bull channel. Price is stalled here for now. However, while the market holds above the 1.0785 level and with momentum studies bullish, the focus is on a further push higher and a challenge of the 1.1126 level next.