Forex analytics. The euro couldn’t believe its luck – ForexNews.PRO
The markets are tired of selling the US dollar. They perceive poor data on the US economy as noise that should be ignored. Christine Lagarde’s optimism about the eurozone economy with an increase in ECB forecasts does not become a catalyst for the EURUSD rally. There is too much negativity embedded in the greenback rate. Wouldn’t it be time for him to grow up before he falls down again?
The decline in the growth rate of American consumer prices to 2.7% and core inflation to a more than four-year low of 2.6% was a bolt from the blue. Investors prepared to sell EURUSD on data close to forecasts, but instead had to buy. However, the music on Bykov Street did not last long. The market did not take the November BLS report at face value. There were too many gaps in it.
The euro and the ECB did not help. The increase in eurozone GDP forecasts is, of course, good news. However, Christine Lagarde had previously announced this move by the central bank. At the same time, the shift in the timing of the return of inflation to the 2% target for 2028 made me think. If consumer prices fall short of the target in 2026-2027, why not lower rates? Moreover, the Frenchwoman noted that trade risks will continue to put pressure on the economy of the currency bloc.
Fortunately for the euro, a Bloomberg insider confirmed rumors about the end of the monetary expansion cycle. Unless there is a serious shock, the deposit rate will remain at 2%. Talking about raising it is considered premature. This approach is in line with recent forecasts by Bloomberg experts. They believe that there will be no changes in the ECB’s monetary policy until 2027.
In my opinion, the reaction of the EURUSD to the statistics on US inflation for November and the results of the meeting of the European Central Bank shows investor fatigue. The topic of divergence in the monetary policy of the ECB and the Fed has become a sore point. It is clear where the main currency pair will move in the long term. However, while the Fed is pausing, it is possible to lock in some of the profits on long positions and pay attention to the US dollar.
Indeed, the US inflation data only slightly increased the chances of a loosening of the Fed’s monetary policy. The January figure remained unchanged at 24%, while the March figure increased from 54% to 58%. There is a break in the cycle. The central bank will be waiting for new data. Traders should probably take a break from selling the US dollar.
