EURUSD rises in the wake of solid economic recovery
As solid fundamentals make it possible for the ECB not to be too hawkish, the euro may edge higher. According to the most recent PMIs, the euro zone’s business activity continues to improve, mainly in the service sector. A solid economic foundation would encourage the ECB’s continued efforts to reduce its inflation target to 2%, which now seems a symbolic figure. Market analysts expect 25 basis points rate hikes in the summer. A strong reading of last month’s retail sales in spite of rising living costs would build the case for further narrowing the rate differential with the Fed. 1.1030 It is a key resistance. 1.0550 The current floor.
USDCAD gets support from rising oil prices
Oil prices rose to new highs, strengthening the Canadian dollar. The Bank of Canada stopped its interest rate hike campaign in March. This will make the meeting more uneventful. As markets scaled back bets of further tightening from other central banks, the loonie could finally stand out with the greenback’s softness and surging crude prices being major drivers of its price action. After the OPEC+ plan to reduce more production, there has been a sharp uptick in oil prices.