Eurozone Inflation Spikes Ahead of ECB
ECB On Watch today
Plenty of central bank action today as the BOE and ECB prepare to deliver their April rate decisions. Both banks are widely expected to hold rates steady though hawkish risks abound and forward guidance from both is likely to point to the growing risk that tightening might soon become necessary as energy driven inflation continues to threaten both the UK and eurozone economies.
Hawkish Risks
The ECB has been the more forwardly hawkish of the two banks, openly voicing concern over the inflationary impact of the Iran war and subsequent energy price spike. With energy prices higher again this week as peace talks stumble and the latest eurozone flash CPI reading jumping to 3% YoY, EUR is likely to find support on the back of today’s meeting. Market pricing for the ECB has turned more hawkish in recent weeks which suggests that the bar for a fresh push higher in EUR has been raised. However, with oil prices now expected to remain elevated in coming months, a clear hawkish signal from the ECB today could easily see EUR spiking higher into the weekend. Any hawkishness from the ECB should be further reinforced over coming sessions if US/Iran peace talks remain stalled and oil prices push higher again.
Technical Views
EURUSD
For now, EURUSD remains back below the bull trend line and 1.1756 level after the early April rally failed. While below here, a further push lower towards the 1.16 level looks likely, in line with falling momentum studies readings. If price moves back above the 1.1756 level, however, focus turns to 1.850 as the next resistance to note.
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With 10 years of experience as a private trader and professional market analyst under his belt, James has carved out an impressive industry reputation. Able to both dissect and explain the key fundamental developments in the market, he communicates their importance and relevance in a succinct and straight forward manner.