Unwinding stimulus | 26 Abril 2022

26 Abril 2022, EUR/USD

Unwinding stimulus

EURUSD trading plan:

European Central Bank policymakers are keen to end their bond purchase scheme at the earliest possible moment and raise interest rates as soon as July. The ECB has been removing stimulus at the slowest possible pace this year but a surge in inflation is now putting pressure on policymakers to end their nearly decade-long experiment with unconventional support. The big obstacle so far has been that longer-term forecasts still showed inflation falling back below the ECB's 2% target but fresh estimates shared with policymakers at their April 14 meeting showed even 2024 inflation over target. Markets price in around 85 basis points of hikes for this year, so more than three 25 basis point moves, which would put the minus 0.5% deposit rate back in positive territory for the first time since 2014.

Investment idea: buy 1.0670 and take profit 1.0720.

David Johnson
Analyst of «FreshForex» company
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