The EUR/USD pair advanced considerably on Tuesday and approached the 1.0970 resistance area underpinned by hawkish comments from European Central Bank (ECB) President Christine Lagarde, while the improved market mood also kept the dollar under pressure.
At the time of writing, the EUR/USD pair is trading at the 1.0960 zone, up 0.52% on the day, after reaching a five-day high of 1.0977.
Speaking at the European Central Bank Forum on Central Banking 2023 in Sintra, Portugal, Lagarde said the ECB would have to bring rates to "sufficiently restrictive" levels and keep them there "for as long as necessary" as "inflation in the euro area is too high and is set to remain so for too long."
Additionally, the improvement in market sentiments, evidenced by rising stocks, has fueled the EUR/USD advance. Main stock indexes are trading in the green on Wall Street, while European stocks snapped a six-day declining streak.
Data from the Conference Board showed US consumer optimism jumped to a 17-month high of 109.7 in June amid fewer worries about a recession.
From a technical perspective, the EUR/USD short-term outlook has improved according to indicators on the daily chart, while the price holds up above the critical 1.0900 support zone.
A break above the 1.0970 highs could underpin a steeper rally, targeting 1.1000 en route to the 1.1070 area. Conversely, the loss of 1.0900 would deteriorate the short-term scenario, exposing the next support area at the 1.0815-30 region, where the 20- and 100-day simple moving averages (SMA) lie after completing a bullish cross.
