Reuters revealed that the European Central Bank (ECB) wanted Philip Lane, the ECB’s Senior Economist, to say that there were dangers of inflation going up in the policy meeting last week. However, Lane refused, citing people who were in the room.
Other Important Insights
Philip (Lane) didn’t like it when people talked about the upside risks. It looked like they agreed on a “small upside risk,” but even that wasn’t in the statement.
The closest ECB Head Christine Lagarde got to acknowledging the possibility of an upside risk was when she responded to a reporter’s query with the phrase “there may be an upside risk.”
The assertion didn’t give the debate the same flavor as they had hoped it would. The ECB’s projections have changed a lot over the years.
An Overview Of The Technical Aspects
EUR/USD CHART Source: Tradingview.com
The EUR/USD is moving underneath the 100-period, 50-period, and 20-period simple moving averages on the four-hour chart.
Also, the relative strength index on the same chart isn’t going up, which means that the duo has already misplaced its bullish impetus.
1.1240 seems to be a place with much support on the downside. This is before 1.1220 (the December 15 low) and 1.1200 (psychological and static levels).
At 1.1300, the psychological level, 50-period SMA, 100-period SMA, and 1.1320, the resistance is found (200-period SMA).
Review Of The Fundamentals
After the European Central Bank (ECB) meeting in the second part of the previous week, the EUR/USD rate fell rapidly on Friday and lost all of the gains it had made.
It now seems to be in a phase of consolidation around 1.1250. With the record number of Omicron cases making people afraid that Europe will get stricter, the shared currency might not find many buyers.
New restrictions were put in place over the weekend to stop the spread of Omicron variants. There are places in Germany where you can’t go if you haven’t been vaccinated, but the country’s health minister says there won’t be a full lockdown just before Christmas.
Investors will keep an eye on the number of people who go to the hospital, which could be the main reason for more restrictions.
However, on Monday, Pablo Hernandez de Cos, an ECB Governing Council member and the head of Spain’s central bank, said that a rate rise in 2022 was not likely.
There are also many people fleeing to safety, which means that the interest rate on US Treasury bonds is going down. At least for the time being, this is holding back the Greenback’s advances.
There won’t be any big data releases for the rest of the day, and Wall Street’s main indexes are still on track to open lower. Even though the yields on the Greenback are going down, the risk-averse nature of the market is inclined to help the Dollar stay strong against other currencies.