- At the beginning of this week's trading, the price of the euro currency pair against the dollar, EUR/USD, compensated for last Friday's losses, which affected the support level 1.0788; with gains that affected the resistance level 1.0915, which is stable around it at the time of writing the analysis.
- Tightening signals from the European Central Bank continues to add to the euro's gains.
- In this regard, the ECB has completed the majority of the increases in borrowing costs required to tame inflation, according to ECB Governing Council member Gediminas Simkus.
While underlying price pressures, which hit another record high last month, remain a problem, the most intense bout of monetary tightening in the ECB's history may be coming to an end, the head of the Lithuanian central bank said yesterday. "Core inflation is holding," he added. And “I think we've covered the bulk of the path to interest rate increases, but we're not there yet.”
European Central Bank officials ponder the extent to which interest rates will rise as the recent global banking turmoil threatens to affect lending and economic growth. Adding to their anguish is OPEC+'s decision on Sunday to cut oil production - a move that risks fueling consumer prices. Other risks - such as REITs - are also emerging. Member Simkus isn't the only policymaker to say that the price cycle may end soon. “We have completed most of our journey to raise interest rates,” said Bank of France Governor François Villeroy de Gallau on Friday, although “we may still have a small way to go.”
And in comments published Sunday in the newspaper Proto Thema, Greece's Yiannis Stournaras agreed, although he declined to speculate on the outcome of the next policy meeting in May. "Especially after the recent events, I now feel that we are nearing the end," he said. And "I can't say we're at the end, it's over, but we're definitely near the end."
On the other hand, the European Central Bank warns of the risks posed by a real estate fund worth 1 trillion euros. Funds invested in commercial real estate pose a threat to financial stability after growing exponentially over the past decade, according to the European Central Bank. The bank also said Monday in its macroprudential publication that the net asset value of REITs has more than tripled to more than 1 trillion euros ($1.1 trillion) in the past 10 years, strengthening their interdependence with real estate markets.
He warned against incompatibility because investors have frequent opportunities to withdraw funds, while the assets themselves are completely illiquid. That could make compounds vulnerable to run-ins like those that have reverberated through the financial system recently. The ECB added that instability here "could have systemic ramifications" for commercial real estate, "which could, in turn, affect the stability of the broader financial system" and the real economy. Commercial properties have suffered from the pandemic, which has fueled work-from-home and e-commerce policies. Now, an uncertain economic outlook and rapid increases in interest rates to combat inflation pose additional risks.
EUR/USD Technical Outlook:
The bulls’ control over the performance of the EUR/USD currency pair continues, and the stability is above the resistance at 1.0900, which supports the trend, and at the same time, according to the performance on the daily chart. It moves some technical indicators towards overbought levels, the psychological resistance following the performance of the level of 1.1037, and on the other hand, for the same time period, a return to the vicinity of the 1.0750 support will support the bears to start moving again. The currency pair may remain on its current path until the markets react to the US jobs numbers this week.
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