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The Euro digested the last Council of Governors (Thursday) and the NFP report on American employment (Friday), moving within narrow margins close to $1.0940 per euro.
Unsurprisingly, the ECB did not move its key rates, but the downward revision of growth, like the confidence in a return to inflation of 2% from next year, pleased the markets. The flagship equity index of the second largest economic power in the Euro Zone even managed to overcome a major psychological threshold, 8,000 points.
“The downward revision of its economic outlook was the key information of the meeting […] of the ECB, because its long-term inflation forecast reaches its target of 2%, which means that the ECB can start to lower its key rates”, for Patrick Barbe, Head of European Investment Grade Fixed Income at Neuberger Berman. “Nevertheless, Ms. Lagarde explained that more information was needed because she is not yet “sufficiently confident” about progress in reducing inflation.”
The door is therefore open for June, while keeping a close eye on the evolution of salaries.
[Mme Lagarde] “remains particularly vigilant on the evolution of wages and corporate profits and will know a little more in April, but a lot more in June. Surprisingly, it downplayed the fact that its monetary policy is “dependent on data”, which means that the conditions for reducing rates are already in place, which implies that the market should react positively, with lower rates as well as credit spreads.
Martin WOLBURG, chief economist of GENERALI INVESTMENTS maintains his “forecast of a first rate cut of 25 basis points by June and [continue] to consider cumulative cuts of 100 basis points in 2024. Markets barely reacted to today’s ECB meeting, slightly dovish, but left the expected trajectory of policy rate cuts almost unchanged.”
Friday’s session was marked by the publication of the NFP report on American private employment. If the unemployment rate climbs from 3.7% to 3.9% of the active population, job creations in the private sector have clearly exceeded expectations, coming to 275,000. On the other hand, the extreme moderation of the The increase in wages is clearly likely to reassure the financial community.
Not much to eat this Monday in the macroeconomic chapter, currency traders will wait until 2:30 p.m. tomorrow to learn about consumer prices. CPIs are expected at an annualized rate of +3.1%, in the broadest base of products, food and energy included.
At midday on the foreign exchange market, the Euro was trading against $1.0940 approximately.
KEY GRAPHIC ELEMENTS
The upward crossing of the 20-day moving average (in dark blue) over its 50-day counterpart (in orange), if it were to happen quickly, would give the signal for the construction of a long position on the pair of currencies. Alerts are scheduled.
MEDIUM TERM FORECAST
Considering the key graphical factors that we have mentioned, our opinion is neutral in the medium term on the Euro Dollar (EURUSD).
We will maintain this neutral opinion as long as Euro Dollar (EURUSD) prices are positioned between support at 1.0810 USD and resistance at 1.1012 USD.
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