EUR/USD: Ms. Lagarde, will you draw first?

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After suffering on Wednesday in the wake of American inflationary figures (CPI beyond expectations), the Euro/Dollar currency pair temporarily stopped the hemorrhage in the wake of the ECB Governing Council.

Unsurprisingly, the ECB maintained its key rates for the 5th time in a row. But the speech of its president Christine Lagarde gave some indications on the future intentions of the European institution. The ECB confirms the continuous and gradual decline in inflation and emphasizes that “most measures of underlying inflation” are decreasing and that “wage growth is gradually tapering off”…

It is therefore gradually preparing the markets for a first cut in interest rates in June, if the inflation trajectory was still oriented towards its 2% target.

“The ECB continues to signal the start of rate cuts this summer, subject to inflation trends and labor market conditions aligning with expectations,” for Gurpreet Garewal, Macro Strategist, Fixed Income and Liquidity Solutions, Goldman Sachs AM.

For Nomura economists, it is very likely “that the ECB will begin its reduction cycle in June and will carry out a reduction per meeting this year (125 basis points in total, which will bring the deposit rate down to 2.75 However, if inflation risks in last mile services materialize, the pace could easily be slower.”

The monetary institution headed by Madame Lagarde would thus beat its American counterpart, the Fed – a historic first.

Furthermore, the single currency, a barometer of risk appetite, is penalized by geopolitical tensions, in particular between Israel and Iran.

On the agenda this Friday, to follow as a priority the U-Mich consumer confidence index, in preliminary data at 4:00 p.m.

At midday on the foreign exchange market, the Euro was trading against $1.0650 approximately.

KEY GRAPHIC ELEMENTS

The very sharp downward movement of the Euro/Dollar following the publication of inflationary figures in the United States unlocked our stop at $1.0767. We prefer to stay out of the spot immediately, waiting for a clearer technical signal. The test of an intermediate support zone at $1.0693 could potentially be instructive.

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 1.0550 USD and resistance at 1.0885 USD.

DAILY DATA CHART