The EUR/USD tests resistance as traders await the ECB meeting. The pair surged in January due to a dollar selloff driven by concerns over U.S. political stability. Trump’s comments on the Fed’s independence and the threat to Powell rattled markets, prompting investors to reassess their dollar holdings.

The ECB and major central banks issued a statement defending central bank independence. The euro’s appreciation poses challenges for the ECB, impacting inflation and export competitiveness. Policymakers are concerned about the currency’s strength driving inflation below target and its impact on exports.

Today’s ECB meeting may influence the EUR/USD trajectory. Lagarde’s language on inflation risks, euro strength, and policy options will be key. While the ECB is expected to maintain its stance, any hints about future policy moves could impact trading signals.

The path to 1.20 for the EUR/USD depends on broader dollar narrative. Concerns about Fed independence and U.S. economic data could push the euro higher. Lagarde’s comments on euro strength and policy direction will be crucial for traders looking for signals on future moves.

Read more at Yahoo Finance: Can Lagarde Push the EUR/USD Higher? (Part 2)