The Euro traded almost flat in relation to the dollar during the early part of Friday’s session, following the gains recorded on Thursday, after the European Central Bank announced its first strategic review in 18 years. The ECB is set to no longer consider 2% inflation as a ceiling, but rather as a symmetric target. This review marks a distancing from the conservative monetary approach of the Bundesbank, which was the base for the creation of the euro, with the ECB now having more room to manoeuvre in terms of monetary policy, being able to tolerate inflation at 2%, or even slightly above, with greater ease. Judging by the performance of the single currency yesterday, traders welcomed the move, seeing it as positive for the future growth prospects of the eurozone.
Bullion’s trend continued to slow-down for the end of the week as the “risk-on” mood remained, and the US dollar stayed flat. Technically speaking, the bullish break-out registered on Tuesday remains valid despite the lack of directionality of the end of the week, due to lingering uncertainty over many asset classes. Indeed, investors have a lot to deal with and, between US tapering, virus cases picking up and lifting traveling restrictions, there is still plenty of uncertainty as to where the global economy is going. The wait-and-see stance prevails so far and prices will have to either clear the $1814 level or break the $1790 support to register increased market directionality.
Stocks rose everywhere in Europe on Friday, despite a mixed trading session in Asia following disappointing Chinese figures, and amid strengthened market sentiment following yesterday’s decision on inflation from the ECB. European stock investors welcomed Christine Lagarde’s reassuring comments after the ECB decided to raise its inflation target, keeping the extremely dovish monetary policy in place. Of course, what makes investors really happy about this stance is that the ECB will provide longer support to the economy and sustain the recovery for more time. This came as an important bullish driver for stocks after global market sentiment recently started to be significantly weighed down by increasing virus cases due to the incredibly fast spreading Delta variant. All European sectors are in the green, but the best performance was seen in Paris today as the CAC-40 is registered a solid 100pts rebound over the lower band of its bearish flag.
Pierre Veyret– Technical analyst, ActivTrades
Disclaimer: opinions are personal to the authors and do not reflect the opinions of LeapRate. This is not a trading advice.
Experienced writer and journalist, working in the global online trading sector, Steffy is the Editor of LeapRate. She has previous experience as a copywriter and has been with the company since January 2020. Steffy has a British and American Studies degree from St. Kliment Ochridski University in Sofia.