Christine Lagarde spoke today on monetary policy:
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We want to keep raising the interest rate in order to lower inflation
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Further rate hikes will be strong
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The ECB wants to achieve a neutral interest rate, although it is not known at what level it is exactly
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If inflation does not slow down, increases may continue above the neutral rate
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In the future, if inflation falls below the target at neutral rates, the ECB may decide to take additional measures
It can be said that Lagarde wants to contain some of the recent weakening of the euro. On the other hand, it has already been said that the ECB will also reach restrictive levels in the case of interest rates. According to some ECB bankers and economists from other institutions, the neutral rate is in the range of 1-2%. Additionally, we can look at 10-year yields or long-term inflation expectations, although in this case we are also in this range or slightly above. At the moment, however, the market is considering the scenario where interest rates will remain above this level.
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EURUSD is trying to rebound after the morning sell-off partially caused by the collapse of the pound. It is worth paying attention to the RSI, which rebounds from17 pts level. The previous rebound from this level launched an upward move of 180 pips. If history is to repeat itself, the pair could jump to 0.9730 level. Source: xStation5
