Euro Breaks $1.1400 as Lagarde Douses Rate Hike Hopes

The euro touched a new low for the year on Thursday, sliding through $1.1400 for the first time since November 2024. The move followed weak eurozone business surveys and comments from ECB President Christine Lagarde that traders read as a signal the central bank is in no hurry to tighten.

Germany's composite PMI fell to 47.8 in March, missing the 49.0 consensus and deepening the contraction in the bloc's largest economy. France's reading came in at 46.2, also below forecasts. The data reinforced a picture of a region struggling to generate growth momentum even as inflation drifts toward target.

Lagarde, speaking at a conference in Frankfurt, said the ECB would "monitor incoming data carefully" before making any further policy moves. Markets had been pricing a small chance of a rate hike at the June meeting. Those odds evaporated after her remarks. The euro sold off through the afternoon session in New York.

"The market is repricing the ECB path lower relative to the Fed," said Jane Foley, senior currency strategist at Rabobank. "That divergence is the main driver of euro weakness right now."

The break below $1.1400 was technical as much as fundamental. That level had held as support since mid-February. Once it gave way, stop-loss orders accelerated the move, pushing the pair to an intraday low of $1.1372 before a modest bounce into the close.

Resistance now sits at $1.1420, the old support turned resistance. A reclaim of that level would suggest the selling is exhausted for now. A failure to hold above $1.1370 opens the path toward $1.1310, the next major support from the October 2024 lows.

The divergence story extends beyond the euro-dollar pair. EUR/CAD fell 0.6% on the session, retreating from the year's high near 1.6200. A bearish engulfing pattern on the daily chart points to further downside toward the 1.6100–1.6030 zone, according to technical analysts at ING. A break above 1.6270 would invalidate that setup and target 1.6350.

Friday brings Germany's Ifo Business Climate Index. The headline is expected to tick up to 85.6 from 84.9, with the expectations component rising to 85.0 from 83.8. An upside surprise could give the euro a short-term lift. Traders said the bar for a sustained reversal is high.

"A single Ifo beat won't change the narrative," Foley said. "The market needs to see a string of better data and a shift in ECB communication before it rethinks the euro."

The next scheduled ECB speaker is board member Isabel Schnabel on Monday. Markets will watch for any pushback against the dovish interpretation of Lagarde's comments. Without it, the path of least resistance for the euro remains lower.

For traders tracking the pair, the EUR/USD profile offers a reference for key levels and positioning. The broader forex market analysis section covers how the dollar's strength is rippling through other crosses.