Euro had a bad week against its American rival. The prospects of aggressive rate hike from the Fed Policymakers and the idea that Eastern European crisis would take long to get resolved favored the greenback. The Russian invasion of Ukraine disturbed the supply chain and the commodity prices went to multi year highs and led to high inflation. Western nations keep on adding sanctions on Moscow which made the market sentiment sour.
The European Central Bank and the US Federal Reserve unveiled the minutes of their latest meetings. ECB portrayed that a large number of members believe that the current high level of inflation and its persistence needs immediate further steps toward monetary policy normalization, and said that “the three forward guidance conditions for an upward adjustment of the key ECB interest rates had either already been met or were very close to being met.” Meanwhile, FOMC Minutes were far more aggressive than anticipated. US policymakers “generally agreed” on reducing the balance sheet by $95 billion a month, which will likely begin in May. A maximum of $60 billion in Treasuries and $35 billion in mortgage-backed securities would be allowed to roll off per month. At the same time, the document hinted at upcoming 50 bps rate hikes, instead of the average 25 bps as hiked in March.
In this week, Eurozone S&P Global Services PMI on 5th April and EIA Crude Oil Stocks Change on 6th April favored the bullish trend whereas FOMC Minutes on 6th April and German Industrial production and US Initial Jobless Claims on 7th April favored bearish trend for the pair.
The major economic events deciding the movement of the pair in the next week are Eurozone ZEW Economic Sentiment Indicator, Federal Budget Balance at Apr 12, ECB Interest Rate Decision, ECB Monetary Policy Press Conference, US Retail Sales monthly report, Initial Jobless Claims, Michigan Consumer Sentiment at Apr 14 and Fed Industrial Production yearly report at Apr 15.
EUR/USD Weekly outlook: