EURUSD continues to slide after ECB's Villeroy comments

EURUSD moved further away from a nine-month high of $1.10 touched on February 2nd, as traders rushed for the dollar amid expectations that the Fed would stick to its hawkish monetary policy for longer after the recent macroeconomic data from the US. Meanwhile, the European Central Bank is expected to push further with its hawkish approach, despite signs that inflationary pressures may have peaked and recession is looming. ECB President Lagarde recently reiterated that the central bank would keep raising rates to slow down underlying price pressures. Today, ECB member Villeroy also sounded hawkish. In his opinion:

• Inflation is now too fast, and possibly persistent

• Rate cuts timing is "surely" not a question for this year

• The Euro-zone inflation rate may half by mid-2023

• ECB efforts to slow inflation won’t cause a recession

• The ECB could give short-term perspectives on policy

• Sees rates peaking in the summer

• How long rates are kept at the terminal rate is key

• The central question for rate cuts is the return of inflation outlook to 2% target

EURUSD broke below the crucial support zone between 1.0661 -1.0700, marked with a lower limit of the 1:1 structure and previous price reactions. As long as the pair sits below, downward move may deepen towards next support at 1.0570 which coincides with 38.2% Fibonacci retracement of the downward wave started in May 2021. Source: xStation5