EURUSD is moving in an Ascending channel and the market has reached the higher high area of the channel.
The European Central Bank is very set to increase interest rates by half of a percentage point on Thursday. Nevertheless, confusing communication leaves large doubts over how much more economic pain the ECB will inflict in its struggle against inflation.
Therefore, rather than concentrating on the increase that occurred in February itself, governments and investors are already looking ahead to see whether the President of the European Central Bank, Christine Lagarde, will double down on previous signals for another half-percent increase in March and what words she will use to describe any additional tightening that may occur in the future.
At the next policy meeting on Thursday, it is anticipated that the key rate on the deposit facility will be raised to 2.5 percent from its current level of 2 percent.
Europe Energy Crisis
The invasion of Ukraine by Russia in February of this year contributed to an already dire supply situation, which in turn drove up the price of natural gas supplied by other countries. The governments of several European countries have experimented with a variety of different policies in an effort to protect their populations from the most detrimental consequences of rising prices while maintaining the health of their economy.
EURCAD is moving in an Ascending triangle pattern and the market has reached the resistance area of the pattern
But the fact that there have been worker strikes and growing street demonstrations in a number of cities demonstrates that the suffering is genuine and profound for millions of people. In 2021, Russia was responsible for about half of Europe’s total imports of natural gas; nevertheless, certain nations were always going to be more susceptible than others.
The entirety of Europe is shifting its focus toward liquefied natural gas (LNG) in order to lessen its reliance on Russian gas, the majority of which is transported through pipelines. The European Union imported more natural gas liquids (LNG) between January and September of this year than it has ever purchased in a single calendar year before.
ECB Interest Rate Decision
It’s possible that the pace of rate hikes may slow down in March. Despite all of this, though, the majority of market watchers anticipate that Lagarde will indicate yet another half-percent increase for March. Core inflation, which excludes volatile items like energy and food and is considered a harbinger of future inflation patterns, may not yet have reached its maximum level, despite the fact that headline inflation continues to be much higher than the objective of 2 percent.
EURJPY is moving in an Ascending channel and the market has rebounded from the higher low area of the channel.
Furthermore, due to technical difficulties at Germany’s statistics office, inflation data is less accurate, and hence, it is less likely to cause any movement. The hawkish members of the Governing Council have been very vocal recently about the fact that the war against inflation has not been won. Perhaps of more significance is the fact that the opposition from the doves has been rather subdued.
Gabriel Makhlouf, who is generally seen as a pragmatic dove, voiced his support for yet another significant move in March. The European Central Bank (ECB) is widely anticipated to raise interest rates from the present level of 2% to a range between 3.25 and 3.75 percent.
Manufacturing PMI
The decline in the manufacturing sector of the Eurozone continued to improve in January. In January, the S&P Global Eurozone Manufacturing PMI increased for the third consecutive month, climbing to 48.8 from December’s reading of 47.8. Even though it was the highest reading since August, the indicator is still below the threshold of neutrality at 50.0.
EURCHF is moving in the Descending channel and the market has reached the lower high area of the channel
“Although Eurozone manufacturers continued to report falling output and deteriorating order books, sustaining the sector’s downturn for the eighth successive month, the picture is considerably brighter than the lows seen in October.”
“Worries over gas supply constraints and soaring gas costs have given way to a much more stable-looking energy market in Europe, albeit thanks in part to state subsidies and mild weather. At the same time, broader supply chain constraints have eased considerably, helping many companies reduce their backlogs of work and ramp up production.
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