Broker of the Week Oanda - Read Full Review

Free Top Brokers Comparison Service

HELP ME CHOOSE START QUIZ

Three ways Lagarde is leveling up EUR/USD

[ad_1]

  • The ECB has opened the door to squeezing bond buys if conditions improve.
  • President Lagarde’s mentions of the exchange rate remain muted. 
  • The euro benefits from Lagarde’s words that the downside risks are “less pronounced.” 

Subtle changes to language can be meaningful to EUR/USD traders – the European Central Bank has left its interest rates unchanged but seems more upbeat, allowing EUR/USD to rise.

Here are three changes that have pushed the common currency higher and may continue doing so.

1) Perhaps not all the support is necessary

In the statement, the Frankfurt-based institution probably conceded to German hawks, stating that it might not use the full envelope of its bond-buying scheme. If conditions improve, it would refrain from deploying the “full envelope” of the Pandemic Emergency Purchasing Program. 

2) Nothing huge on the exchange rate

Christine Lagarde, President of the European Central Bank, stated that the exchange rate is a drag on inflation – yet is one of many factors dragging prices lower. Not only is her comment on the euro’s high value relatively muted, but it is also far from what markets expected.

Given the recent weakness in the Consumer Price Index, some anticipated starker language and perhaps a hint that the bank is ready to act. That did not materialize. The ECB seems to tolerate an increase in the euro. 

3) fewer downside risks

Lagarde listed the positives such as vaccines, political certainty around Brexit and the US elections, and a strong manufacturing sector. She also expressed concern about the virus’s resurgence, including the variants. 

What is the bottom line? The risk to the growth outlook remain tilted to the downside but are less pronounced – thus serving as a bullish shift. 

All in all, the ECB seems cautious, but also optimistic and far from thinking about a move that would lower the euro – a rate cut. 

EUR/USD Price Forecast 2021: Euro-dollar long-term bullish breakout points to 1.2750

[ad_2]

Source link

We will be happy to hear your thoughts

      Leave a reply

      Trading foreign exchange on margin carries a HIGH LEVEL OF RISK, and may not be suitable for all investors. Before deciding to trade foreign exchange you should carefully consider your investment objectives, level of experience, and risk appetite. You could sustain a loss of some or all of your initial investment and should not invest money that you cannot afford to lose.

      Advertiser Disclosure: Brokerspilot.com helps investors across the globe by spending over hours each month testing and researching online brokers.

      How do we make money? Our partners compensate us through paid advertising.

      While partners may pay to provide offers or be featured, e.g. exclusive offers, they cannot pay to alter our recommendations, advice, ratings, or any other content throughout the site.

      Furthermore, our content and research teams do not participate in any advertising planning nor are they permitted access to advertising campaign data.

      Disclaimer: It is our organization’s primary mission to provide reviews, commentary, and analysis that are unbiased and objective.

      While Brokerspilot.com has some data verified by industry participants, it can vary from time to time.

      Operating as an online business, this site may be compensated through third-party advertisers.

      Our receipt of such compensation shall not be construed as an endorsement or recommendation by Brokerspilot.com, nor shall it bias our reviews, analysis, and opinions.

      en_USEnglish
      Best Forex Brokers Reviews
      Logo
      Reset Password
      Compare items
      • Total (0)
      Compare
      0