• ECB’s Lagarde down-talked the hawkish tone which was perceived by Market on last Thursday ECB monetary policy pivot.
• Downbeat German Industrial production also weighed on the Euro.
• Challenges on the 0.50% Fed rate hike in March and the US- Japan trade deal weighs on the US dollar bulls.

Euro seems under pressure against the US dollar for second consecutive trading day of the week. The rationale behind the move can be related to the dovish comment from ECB President.

Yesterday, ECB’s President Christine Lagarde appeared at the EU parliament and said that “inflation is likely to remain high, in the near term.” Moreover, she emphasized that “there is no sign that would measurably exceed the 2% target in the medium term.” she also noted that “it will remain above the 2% target, but it would be lower than current levels.” In the Q&A session, ECB President down talked the hawkish tone perceived by the traders on last Thursday ‘s ECB’s monetary policy release.

Additionally, ECB policymaker Martins Kazaks said “The European Central Bank (ECB) could end its stimulus programme earlier than planned but it is unlikely to raise its main interest rate in July as investors are expecting.”

Upbeat Euro area Sentix investor confidence for February was overlooked due to the downbeat German Industrial Production for December which shrank to 0.3% when estimates looked for a 0.8% increase.

Markets are now riced in a one-in-three chance the Fed might hike by a full 50 basis points in March, and a reasonable chance rates will reach 1.5% by year end, this weighs on the US dollar bull. On the same note is the US – Japan trade deal.

As per the recent news, “The US and Japan are set to announce a deal that would cut Trump-era tariffs on steel. Under the agreement, a limited amount of Japanese steel will be allowed for import without the 25% levy imposed by President Donald Trump in 2018. If Japan goes over that amount, the tariff would return. Japan is one of the top 10 sources of steel to the United States — yet only accounts for about 4% of all steel imports, according to the Commerce Department.”

EUR/USD 4 Hour Chart:

Support: 1.1416 (S1), 1.1391 (S2), 1.1368 (S3).

Resistance: 1.1465 (R1), 1.1488 (R2), 1.1513 (R3).

Dovish comment from the ECB’s Lagarde puts Euro under pressure and we expect a bearish trend for EUR/USD.