It is the last day of the ECB’s annual symposium and this morning features the keynote panel discussion which includes ECB President Lagarde, Fed Chair Powell, BoE Governor Bailey, and BoJ Governor Ueda.
Powell and Bailey are likely to follow Lagarde’s lead who spoke yesterday and reiterated a hawkish bias for rates and another hike in July. She said it is also doubtful if policy makers would be able to state with full confidence that peak rates have been reached anytime soon.
Currently, bets on further ECB rate hikes in July slightly outdo those for the FOMC meeting later next month.
As for the September policy meetings, there is much debate surrounding another ECB rate hike. That’s in contrast to the Fed whereby markets predict just the one July hike as likelier.
USD’s pain, Euro’s gains?
The dollar struggled against most of its major currency peers yesterday with the euro leading the gains amid the continued hawkish comments from ECB President Lagarde and reports of month-end related demand.
That indicates the USD may struggle to find a stronger bid for the time being.
The euro was second best amongst G10 currencies’ performances against the US dollar yesterday, with the Danish Krone pipping it by just 0.01 percentage point:
- EURUSD climbed by 0.5% on Tuesday
- USDDKK advanced by 0.51% yesterday.
The bloc currency is trying to regain the bullish momentum seen since the start of the month when prices dipped below 1.07.
Bears at last week’s low at 1.0844 was rebuffed by the 21-day simple moving average (SMA) and this should now offer support going forward.
Buyers will look to extend gains beyond Thursday’s top above 1.10123 towards the early February high at 1.10329.
However, note the push and pull forces have congregated around the 50% Fibonacci level from EURUSD’s long-term downtrend (January 2021 – September 2022 peak to trough).
Bulls and bears may continue doing battle around this region for a while more, until a clear fundamental catalyst can spark the next major move, in either direction.
