The US dollar is repressed after Lagarde from the European Central Bank says that the markets should be prepared for volatility because this is just the beginning
- The US dollar remains stuck on the feet and is unable to recover against their main peers.
- Lagarde from the European Central Bank supports concerns by saying that the European Central Bank will need to be vigilant and fast to act under any circumstances.
- The US dollar index has already lost more than 3 % of its value so far this week.
The US dollar index (DXY), which tracks the performance of the US dollar (USD) for six major currencies, is residing without a 104.00 mark on Thursday in a week full of turmoil. Besides the warning signs of the European Central Bank (ECB), many banks and merchants stated that senior customers are returning their foreign investments denominated in US dollars to return to their local currencies. This may mean that such folders will not return any time soon, according to FT reports.
Return comes to the homeland after weakening the American economic data, which is concerned about the markets about the possibility of having a Trump tariff an impact on local inflation and re -fears fixed this week. It is clear that the President’s approach to the United States (the United States) Donald Trump began to obtain some negative repercussions.
Meanwhile, the focus will now turn into Europe, where a high -level European meeting will be held on Thursday. European Union leaders will discuss the draft law on defense after Trump indicated that the United States will not play an active role in NATO. The United States has now been re -supported to Ukraine. The European Central Bank (ECB) reduced the policy price by 25 basis points as expected, despite changing the language of its statement to the most honest.
Daily Digest Market Movers: Lagarde keep DXY on the downside
- The job cuts in the United States were in February. A very negative number with an increase of more than 100 % to 172,017 concerns the head compared to 49,795 last month.
- The European Central Bank (ECB) issued a monetary policy decision. As expected, reduce the interest rate by 25 basis points (BPS) from 2.75 % to 2.50 % on the standard deposit price. The European Central Bank reviewed the inflation expectations to 2.3 % compared to 2025 compared to 2.1 % at first.
- The unemployed demands have been issued in the United States and the American trade balance data for January:
- Initial claims for the week ended on February 28, 221,000, stronger than 235,000 expected and less than last week printing of 242,000. Continuous demands for the week ended on February 21 to 1,897 million, a Miss Queen at 1.880 million expected and from 1.862 million precedents.
- The American goods trade balance for January witnessed a wider deficit of $ 156.8 billion, which loses a major deficit of $ 127.4 billion, and comes from a deficit of $ 153.3 billion in December.
- European Central Bank President Christine Lagarde is still speaking at the time or writing. Lagarde issues from the European Central Bank there are some warnings of the current change in the trading system and that the European Central Bank will need to be awake in these unconfirmed and very clear times. Chariman repeats the European Central Bank that the European Central Bank is now more than Covid era and beyond, will depend on the data more than ever.
- The shares fall more after Lagarde’s statements from the European Central Bank reveal a positive view of the markets about what will happen.
- The CME Fedwatch tool records a 79.6 % opportunity to reduce the interest rate at the June meeting, with only 20.4 % chance to maintain interest rates in the current range of 4.25 % -4.50 % in June.
- The return in the United States is traded for 10 years about 4.28 %, off its lowest level in five months by 4.10 % printed on Tuesday.
Technical analysis of the US dollar index: just a flavor
The US dollar index (DXY) is bleeding this week, and the reason for external flows is disturbing. Several trading offices indicate that many European pension funds, hedge funds and other major institutions re -allocate their assets from the US dollar to local currencies. This means that a large size suspended for years under the US dollar has now been transferred and it does not seem to return any time soon after a long period that these recession will continue to happen.
On the upper side, the first bullish goal is to restore the simple moving average for 200 days (SMA) at 105.04. Once this level is recovered, many resistance lined up in the short term, with 105.53 and 105.89 selected as two heavy pivotal levels before returning to 106.00.
On the negative side, 104.00 has seen the pressure of pressure but tries to keep it at the present time. Moreover, 103.00 can be considered declining in the event of the start of American revenues again, so that it cannot be conceived up to 101.90 if the markets are more than their long -term possessions of the US dollar.
US dollar index: daily chart
Common questions among central banks
Central banks have a major mandate is to ensure that there is a price stability in a country or region. Economics are constantly facing inflation or contraction when the prices of some goods and services fluctuate. High prices for the same goods mean inflation, and the continuous reduction of the same goods means shrinkage. The central bank’s mission is to maintain demand for queue by adjusting the policy price. For the largest central banks such as the American Federal Reserve (Fed), the European Central Bank (ECB) or the Bank of England (BOE), the mandate is to maintain inflation approximately 2 %.
The central bank has one important tool at its disposal to obtain inflation higher or less, and this is by changing the standard policy price, known as the interest rate. In the previous moments, the Central Bank will issue a statement of its policy price and provide an additional reason about the reason that remains or changes (cutting or walking). Local banks will adjust their savings rates and their lending rates accordingly, which in turn will make it difficult or easier for people to gain their savings or companies to obtain loans and provide investments in their business. When the central bank raises interest rates significantly, this cash tightening is called. When you cut its standard price, it is called cash reduction.
The central bank is often political independent. Members of the Central Bank Policy Council pass through a series of paintings and sessions before being appointed to the Policy Council seat. Every member of this council is often a specific condemnation of how to control the central bank for inflation and subsequent monetary policy. Members who want a very loose monetary policy, with low cheap lending rates, are called to increase the economy significantly while they are satisfied with a slightly higher vision of inflation than 2 %, “doves”. Members who want to see higher rates to reward savings and the desire to keep lighting on inflation at all times are called “hawks” and will not rest until inflation is at 2 % or less than 2 %.
Usually, there is a president or president who leads each meeting, who needs to create a consensus between hawks or doves and has a final saying when it is divided into the division of voting to avoid a 50-50 tie about whether the current policy should be modified. The president will often deliver speeches that can be followed directly, as the current monetary position and expectations are connected. The central bank will try to push its monetary policy forward without operating violent fluctuations in prices or shares or currency. All members of the central bank will direct their position towards the markets before the policy meeting occurred. A few days before a policy meeting was held until the new policy is connected, members are prevented from speaking publicly. This is called the obstruction period.
