What's happening with the price The pair closed Monday just above 1.1350; it dropped below the round 1.1400 three sessions earlier. On Tuesday during the Asian session, the euro is holding in a narrow corridor of 1.1365-1.1370, at the July 28 low.
Why it fell Traders were pricing in a faster ECB rate hike. Lagarde responded directly: "A measured pace of policy remains appropriate as long as there are no signs that energy prices are feeding into wage growth." For the market, this is a signal that sharp moves from the ECB should not be expected, and the euro immediately lost support.
The other half of the pair The dollar is being pulled up by the Fed: after the recent 25 basis point (0.25%) hike, the regulator is guiding the market toward another hike before the end of the year. US government bond yields are at multi-year highs, and the dollar is holding at two-month highs. Plus demand for a safe-haven asset due to escalating tensions in the Middle East.
Levels everyone is watching The nearest support is 1.1350, followed by 1.1325 (this year's low, set in June) and 1.1300. On the upside, the path is blocked by 1.1460, the psychological 1.1500, and the 200-day moving average at 1.1557.
What's next The market isn't making any big bets yet: they're waiting for news on the Middle East and the next signals from the ECB and the Fed on rates. The range is narrow, and any breakout beyond its boundaries gives a quick impulse across the entire forex market.
Did you trade the euro during Lagarde's speech?
Moves like these in the euro play out during speeches and data releases - these are minutes, not days. And this is where prop programs diverge: in some places, news trading is allowed, while in others you get your account revoked for a trade on a data release. Plus different spreads and conditions on majors. A forex challenge is chosen by the rules, not by the promised profit share. A minute spent on selection filters out programs where your style is prohibited.