- The key question today is not how far interest rates can be raised, but how big a rollover of what’s already in the pipe
- In the current tightening cycle, the delay in policy transfer may be at the higher end of the 1-2 year range. Today I expect to be at the final rate no later than September
- The acceleration of rate increases from 50 basis points to 25 basis points was prudent and cautious
- We need to keep an eye on crossing our previous large and exceptionally fast highs
- How long we keep rates high is now more important than the exact final level
- We will continue to look at the data driven by the meeting with the outlook for inflation and the strength of monetary policy transmission
- We can stroll or pause for the next three meetings
Meanwhile, ECB’s Lane says so
- Markets believe that inflation will return to 2% for the foreseeable future
EURUSD is back trading above and below the 100-day moving average at 1.0808. The midpoint comes 50% of the rise from the March 2023 low to the April 26th high of 1.0805. The current price is trading at 1.0807 right at the two key levels. The market is not sure about the next batch.
NB. The low to high trading range is 36 pips. This is well below the average of the 76 PIP trading range during the last month of trading. There is room to run around in respite with the momentum. So far, “the momentum is lacking, but the buyers had the last chance as the price made new highs for the day.
This article was written by Greg Michalowsky at www.forexlive.com.
