EURUSD is stable as ECB maintains smaller hikes
The euro has rallied as the high growth in prices warrants tightening. The ECB expects a long-term disinflation as prices have slowed down after readings in double digits last year. Still, Chief economist Philip Lane expects price momentum fuelled by wage growth to hold inflation above the bank’s 2% target for years. This view was echoed by other officials, leading the market to believe the ECB would continue with the 25 bp increments until the summer. The central bank could then monitor the economic data and adjust its policy accordingly. 1.1250 The next resistance is a? 1.0800 Fresh support
USDCAD is on the rise as Canada’s inflation comes into focus
The Canadian dollar recovered its losses after the Bank of Canada opened the door to more rate increases. BoC Governor Tiff Macklem has stated that the central bank is ready to hike rates further if inflation remains persistently above the 2% target, which means that this week’s CPI will carry considerable weight. The BoC may stay out of the market if inflation continues to fall. A positive surprise could lead to more policy.
