empty
02.07.2024 10:15 AM
The ECB needs more time and data

President Christine Lagarde and her chief economist stated yesterday that the European Central Bank does not yet have sufficient evidence to conclude that the threat of inflation has passed. This fuels expectations that officials will unlikely proceed with further interest rate cuts this month. Although inflation data for the eurozone for June is set to be released soon, and if we see a decrease in figures following a slight increase in May, the regulator may take a more dovish stance on future policy.

However, considering that the labor market in the eurozone remains at a fairly good level, the ECB still has time to wait for new information related to the economy. "We are still facing some uncertainties regarding future inflation, especially regarding how core prices will change, wages will grow, and productivity will be like. It is now important to understand whether the economy will suffer from new supply-side shocks," Lagarde said. "We will need time to gather enough data to ensure the risks of exceeding the inflation target have passed."

This image is no longer relevant

As I noted above, all this suggests a preference to keep borrowing costs unchanged at the meeting later this month. Investors are particularly interested in Lagarde's statements on how the ECB will proceed with rate cuts.

It is also worth mentioning that yesterday, there was no discussion of the political struggle in France, nor were there specific indications regarding the ECB's future actions. However, Lagarde reaffirmed her commitment to making decisions as data comes in. "A strong labor market means we can take our time to gather new information, but we also need to remember that the economic growth outlook remains uncertain," she said. "All this points to our data-dependent stance in making policy decisions."

Lagarde also noted that officials' assessment of inflation prospects is based on forecasts but is not limited to them, refuting analysts' assumptions that the ECB would only consider changing rates at quarterly meetings.

She also emphasized that any particular statistic will not sway policymakers, as it has been repeatedly noted that the path back to 2% will be bumpy and may include temporary setbacks. "While the new flow of data constantly supplements and improves our picture of medium-term inflation, we are not committing ourselves to any specific point at which we will definitively act," Lagarde said. "Data dependence does not mean dependence on achieving exact outcomes."

Regarding the current technical picture of EUR/USD, buyers must focus on capturing the 1.0740 level. Only this will allow aiming for a test of 1.0770. From there, it could climb to 1.0790, but achieving this without support from major players will be quite challenging. The ultimate target would be a maximum of 1.0815. In the event of a decline in the trading instrument, I expect serious action from major buyers only around the 1.0720 area. If there is no support, it would be prudent to wait for a retest of the 1.0695 minimum or open long positions from 1.0630.

Regarding the current technical picture of GBP/USD, pound buyers need to capture the nearest resistance at 1.2655. Only this will allow aiming for 1.2670, which will be challenging to break through. The ultimate target would be the 1.2700 area, after which we could discuss a more significant upward surge to 1.2730. In case of a fall, the bears will try to take control of 1.2610. If successful, breaking this range will seriously blow the bulls' positions and push GBP/USD to the 1.2580 minimum with a prospect of reaching 1.2550.

Jakub Novak,
Analytical expert of InstaForex
© 2007-2025
Select timeframe
5
min
15
min
30
min
1
hour
4
hours
1
day
1
week
Earn on cryptocurrency rate changes with InstaForex
Download MetaTrader 4 and open your first trade
  • Grand Choice
    Contest by
    InstaForex
    InstaForex always strives to help you
    fulfill your biggest dreams.
    JOIN CONTEST

Recommended Stories

GBP/USD Pair Overview – March 26: The Pound Isn't Even Trying. Inertial Growth Continues

The GBP/USD currency pair resumed its upward movement on Tuesday. It did so on a day when there were no significant events in the UK, and the only noteworthy report

Paolo Greco 02:40 2025-03-26 UTC+2

EUR/USD Pair Overview – March 26: No News, No Movement

The EUR/USD currency pair traded with low volatility on Tuesday. There have been times when the euro would crawl just 40 pips a day, and while current volatility isn't extremely

Paolo Greco 02:40 2025-03-26 UTC+2

EUR/USD: The Southward Trend Stalls, but Long Positions Remain Risky

A mixed situation has developed around the EUR/USD pair. On the one hand, the bearish sentiment prevails: last week, the price reached a 5-month high at 1.0955, while on Tuesday

Irina Manzenko 23:59 2025-03-25 UTC+2

USD/JPY. Analysis and Forecast

The USD/JPY pair is retreating from the psychological level of 151.00, reached earlier on Tuesday, though this pullback is not accompanied by significant selling pressure. The Japanese yen is attracting

Irina Yanina 18:09 2025-03-25 UTC+2

The Market Has Turned Everything Upside Down

Is the worst behind us? As the S&P 500 surged to a three-week high amid easing tariff threats from Donald Trump, banks and investment firms rushed to the bulls' side

Marek Petkovich 08:18 2025-03-25 UTC+2

What to Pay Attention to on March 25? A Breakdown of Fundamental Events for Beginners

Very few macroeconomic events are scheduled for Tuesday, and none are of significant importance. At best, the German business climate report and U.S. new home sales data can be mentioned

Paolo Greco 06:30 2025-03-25 UTC+2

GBP/USD Pair Overview – March 25: The Pound Rises Before It Even Wakes Up

On Monday, the GBP/USD currency pair again showed upward movement. The pound sterling began rising overnight despite no clear reasons or fundamental drivers. Yet the market on Monday clearly demonstrated

Paolo Greco 04:02 2025-03-25 UTC+2

EUR/USD Pair Overview – March 25: The Euro Continues to Creep Downward in a Correction

The EUR/USD currency pair showed relatively low volatility on Monday. However, looking at the chart below, it becomes clear that volatility hasn't been high recently—aside from a few days several

Paolo Greco 04:02 2025-03-25 UTC+2

EUR/USD: PMI Indices and WSJ Insider Reports

On Monday, EUR/USD traders concentrated on factors that benefitted the U.S. dollar, while negatively impacting the euro. Insider reports from U.S. media concerning the "April 2 tariffs" supported the pair's

Irina Manzenko 00:00 2025-03-25 UTC+2

USD/JPY. Analysis and Forecast

At the start of the week, following the release of a weaker Japanese PMI, the yen came under pressure. This, combined with news of narrower and less aggressive retaliatory tariffs

Irina Yanina 13:20 2025-03-24 UTC+2
Can't speak right now?
Ask your question in the chat.
Widget callback
 

Dear visitor,

Your IP address shows that you are currently located in the USA. If you are a resident of the United States, you are prohibited from using the services of InstaFintech Group including online trading, online transfers, deposit/withdrawal of funds, etc.

If you think you are seeing this message by mistake and your location is not the US, kindly proceed to the website. Otherwise, you must leave the website in order to comply with government restrictions.

Why does your IP address show your location as the USA?

  • - you are using a VPN provided by a hosting company based in the United States;
  • - your IP does not have proper WHOIS records;
  • - an error occurred in the WHOIS geolocation database.

Please confirm whether you are a US resident or not by clicking the relevant button below. If you choose the wrong option, being a US resident, you will not be able to open an account with InstaForex anyway.

We are sorry for any inconvenience caused by this message.