Lagarde Boosts the Euro and the DAXLagarde Boosts the Euro and the DAX: Is the ECB Putting an End to the Rate-Cut Cycle?
Ion Jauregui - ActivTrades Analyst
European Central Bank President Christine Lagarde delivered a key speech before the European Parliament that has shaken financial markets, pushing the euro to multi-year highs and boosting stock market optimism in Germany. Her message, full of signals of monetary stability and strategic progress such as the digital euro, was interpreted as the official end to the rate-cut cycle that began in 2024.
“Risks to growth remain tilted to the downside, but current conditions do not justify further adjustments,” Lagarde told EU lawmakers.
The Euro Nears New Highs After ECB Message
Currency markets reacted immediately. EUR/USD climbed to the 1.1700 zone, reaching levels not seen since December 2021. The move was reinforced by the ECB’s firm tone and a weaker dollar, also impacted by U.S. tensions following controversial statements from President Trump regarding the Federal Reserve.
From a technical standpoint, the euro maintains a clearly bullish bias. It trades above all relevant moving averages and with an RSI close to 71%, indicating strength but also overbought risk that could pull the price back to the control area around 1.13764, the current consolidation zone. The next key level is at 1.1800, while support levels are at 1.10792 and 1.09823.
The DAX Heads Toward New Highs
The German stock market also welcomed the ECB’s message of stability. The DAX, already showing strength in previous sessions, is trading around 23,673 points at today’s open, very close to its current high of 24,455.98 points. The index is benefiting from a stable rate environment, improved economic sentiment in Germany — reflected in the Ifo index rebound — and a recovery in the industrial sector.
Technically, a sustained close above 23,000 points would open the door for a move toward 25,000, while any correction would find support near 21,500. The RSI, currently around 52%, suggests there is still room for further price expansion, given that the 19,960 support was clearly confirmed in the latest technical rebound.
What’s Next for the Markets?
With European monetary policy entering a pause phase, investors are now focusing on two areas: the evolution of economic growth in the eurozone, and the direction of the dollar, shaped by political tensions in Washington and Jerome Powell’s testimony later this week.
Lagarde also brought up the push for the digital euro, a strategic initiative aimed at reinforcing the bloc’s financial autonomy amid global rivals like China and the United States.
Conclusion:
The ECB pauses, but markets move forward. Both the euro and the DAX are showing signs of strength after Lagarde’s speech. If macro conditions remain supportive, we may be entering a new stage of consolidation for European assets.
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