On Thursday, the European Central Bank cut interest rates by 25 basis points to 2.65%, but immediately indicated that the rate-cutting phase might be coming to an end as inflation cools. The euro continued to rise. This led the money market to reduce bets on further action, and they now expect no more than two rate cuts by the end of the year. This dynamic could provide support for the euro.
Banks such as Morgan Stanley, Crédit Agricole and Commerzbank have all defended the outlook for the euro, countering a popular view in the market last month that the euro would soon fall to just $1. Now, the euro has risen by more than 4% this week alone, reaching above $1.08, compared with a rate of around $1.01 against the US dollar a month ago.
Michael Pfister, a foreign exchange strategist at Commerzbank, said: “The biggest change this week is that the euro has finally returned to the market. The market has developed in the direction we expected a little faster than we anticipated, so this is a small victory.”
Hedge funds are currently buying options, believing that the currency could even reach $1.20 within six months, while some investors previously bet that it would fall below $0.95.
Many other banks have also been forced to give in to the euro’s reversal. Several banks, including Goldman Sachs Group and Mitsubishi UFJ Financial Group, have abandoned their prediction of 1 euro to 1 US dollar for this year, which was driven by expectations of the US imposing trade tariffs on Europe and the widening interest rate differential between the two.
Technical analysis:
Gold: After the price refreshed the yellow liquidity zone again yesterday, it rebounded and rose after hitting the daily low of 2891. This is a typical reaction of sweeping liquidity and then rising. The yellow blocks in our plugin captured it perfectly. Today, we continue to pay attention to this behavior of sweeping liquidity and try to catch 1-2 buying opportunities after refreshing the new low. For detailed positions, please consult the plugin.
(Gold 15-minute chart)
The plugin is updated from 12:00 to 13:00 every trading day. If you want to experience the same plugin as shown in the chart, please contact V: Hana-fgfg.
The Nasdaq index: The price has dropped from around 20,700 to below 20,000. It continues the trend of fluctuating and declining this week, and has set a new low. For today, we suggest maintaining the operation of capturing rebounds after setting a new low. For detailed positions, please consult the plugin.
(NASDAQ 15-minute chart)
The plugin is updated from 12:00 to 13:00 every trading day. If you want to experience the same plugin as shown in the chart, please contact V: Hana-fgfg.
Crude oil: The price failed to recover the 67 level and no momentum emerged. Instead, new buying interest only took over after the price dropped below 65.50. Continue with the strategy from yesterday for today, waiting for confirmation that the price can recover and stabilize above the 66.50/67 area before looking for new demand zones to buy. Otherwise, only wait for a rebound attempt after a new low is set. For detailed positions, please consult the plugin.
(Crude Oil 15-Minute Chart)
The plugin is updated from 12:00 to 13:00 every trading day. If you want to experience the same plugin as shown in the picture, please contact V:Hana-fgfg.
Today’s key financial data and events to focus on:
At 17:30, ECB President Lagarde, Governing Council members Nagel, Knot and Panetta will deliver speeches.
18:00 Eurozone Q4 GDP Final Estimate
21:30 U.S. Non-Farm Payrolls Change (Seasonally Adjusted) for February (Thousands)
At 23:45, New York Fed President Williams will deliver a speech.
