There are two possible scenarios if the EUR continues to fall:
1. Will fall deeply within the current downtrend and retest the 1,063 resistance zone
2. Will recover and break out to 1.078
The Euro continued to decline slightly today. According to European Central Bank (ECB) Council member Klaas Knot, investors who expect the ECB not to raise interest rates next week may be underestimating the likelihood of that happening.
According to the governor of the Bank of the Netherlands, while the recession in the Eurozone will certainly reduce demand, the updated inflation forecast will not be much different from June. He said in an interview in Amsterdam whether With such a outlook, which only projects inflation back to target in the medium term, whether to raise interest rates for a 10th consecutive year is "a very difficult decision to make". I continue to think that hitting the 2% inflation target by the end of 2025 is the bare minimum we have to hit. Obviously I wouldn't be comfortable with any developments that would push that deadline any further. And I wouldn't mind if it teleported a little earlier.
Euro and European yields rose after his comments, as markets boosted expectations that the ECB will continue its most aggressive monetary tightening cycle in history during its September 13-14 meeting. Interest rate expectations for a 25bp hike are now around 35% - up from 30% previously.
Just hours before officials began the silence period, Mr. Knot's comments offered some final clues and confirmed that the outcome was still very vague. The deposit rate is currently at 3.75% - about to hit a record high. “The market is struggling,” Knot said. “They are probably going through a similar struggle that we are going through next week. But I can assure you that, when the struggle is over, there will be a decision.”
Since the summer break, more than half of the eurozone national central bankers have publicly spoken about the September meeting.
Governors from Germany, Belgium, Austria and Latvia have signaled support for another 25bp rate hike - possibly the last of this cycle. However, officials from Italy and Portugal are among those to emphasize that economic risks are starting to emerge.
“I will not say today what we will decide on September 14th, moreover because our options are open to this meeting as well as to the next meetings,” said Governor of the Bank. French central bank Francois Villeroy de Galhau said on Wednesday. “But I believe we are near or very close to peak interest rates.”
President Christine Lagarde also did not commit but simply said that inflation was too high, the ECB was determined to refrain and decisions would be based on relevant data.
“We have reached the final stage of the tightening cycle,” said Mr. Knot. Tightening – further rate hikes – is still possible, but not certain.”
1. Will fall deeply within the current downtrend and retest the 1,063 resistance zone
2. Will recover and break out to 1.078
The Euro continued to decline slightly today. According to European Central Bank (ECB) Council member Klaas Knot, investors who expect the ECB not to raise interest rates next week may be underestimating the likelihood of that happening.
According to the governor of the Bank of the Netherlands, while the recession in the Eurozone will certainly reduce demand, the updated inflation forecast will not be much different from June. He said in an interview in Amsterdam whether With such a outlook, which only projects inflation back to target in the medium term, whether to raise interest rates for a 10th consecutive year is "a very difficult decision to make". I continue to think that hitting the 2% inflation target by the end of 2025 is the bare minimum we have to hit. Obviously I wouldn't be comfortable with any developments that would push that deadline any further. And I wouldn't mind if it teleported a little earlier.
Euro and European yields rose after his comments, as markets boosted expectations that the ECB will continue its most aggressive monetary tightening cycle in history during its September 13-14 meeting. Interest rate expectations for a 25bp hike are now around 35% - up from 30% previously.
Just hours before officials began the silence period, Mr. Knot's comments offered some final clues and confirmed that the outcome was still very vague. The deposit rate is currently at 3.75% - about to hit a record high. “The market is struggling,” Knot said. “They are probably going through a similar struggle that we are going through next week. But I can assure you that, when the struggle is over, there will be a decision.”
Since the summer break, more than half of the eurozone national central bankers have publicly spoken about the September meeting.
Governors from Germany, Belgium, Austria and Latvia have signaled support for another 25bp rate hike - possibly the last of this cycle. However, officials from Italy and Portugal are among those to emphasize that economic risks are starting to emerge.
“I will not say today what we will decide on September 14th, moreover because our options are open to this meeting as well as to the next meetings,” said Governor of the Bank. French central bank Francois Villeroy de Galhau said on Wednesday. “But I believe we are near or very close to peak interest rates.”
President Christine Lagarde also did not commit but simply said that inflation was too high, the ECB was determined to refrain and decisions would be based on relevant data.
“We have reached the final stage of the tightening cycle,” said Mr. Knot. Tightening – further rate hikes – is still possible, but not certain.”
