- EUR/USD looks volatile between 1.2150 and 1.2200.
- The ECB revised up its 2021/22 inflation, growth forecasts.
- US headline CPI leaps to 5.0% YoY in May.
The daily performance of EUR/USD keeps the erratic course so far in the 1.2150-1.2200 range on Thursday.
EUR/USD bid post-ECB, US CPI
EUR/USD now alternates gains with losses after the ECB left its interest rates unchanged, as widely anticipated.
At her press conference, Chairwoman Christine Lagarde reiterated that risks remain broadly balanced. In addition, the ECB boosted both its inflation and GDP forecasts. Indeed, the central bank now see inflation tracked by the HICP at 1.9% in 2021 and 1.5% in 2022, while the economy is expected to expand 4.6% this year and 4.7% the next one.
Regarding the labour market, Chief Lagarde noted some movement, or whatever that means.
Lagarde also deemed as premature any exit of the current monetary policy stance, while she commented that purchases of bonds under the PEPP will be flexible. She stressed that the Council did not discuss options on longer-term policies, while there were some debate regarding the bond purchases pace.
What to look for around EUR
Last week’s sell-off in EUR/USD met solid support around the 1.2100 neighborhood. The subsequent bounce managed to re-test the key 1.2200 level, leaving the perspective on the positive side at least in the very near-term. Looking at the broader scenario, the constructive perspective in the European currency stays in place and appears propped up by auspicious results from fundamentals in the bloc coupled with higher morale. Prospects are for a strong rebound in the economic activity in the old continent in the months to come and the investors’ appetite for riskier assets.
Eminent issues on the back boiler: Asymmetric economic recovery in the region. Sustainability of the pick-up in inflation figures. Progress of the vaccine rollout. Probable political effervescence around the EU Recovery Fund. German elections. Investors’ shift to European equities.
EUR/USD levels to watch
So far, spot is losing 0.09% at 1.2167 and a break below 1.2063 (23.6% Fibo retracement of the November-January rally) would target 1.2051 (weekly low May 13) en route to 1.1985 (monthly low May 5). On the flip side, the next up barrier emerges at 1.2266 (monthly high May 25) followed by 1.2300 (round level) and finally 1.2349 (2021 high Jan.6).
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.