Oct 09, 2023

The EURUSD pair has rallied from March lows and will look to build on support.

EURUSD: Weekly Chart

EURUSD fell to test the 1.05 level over the last few weeks but has since rallied and will look for a move towards 1.07.

European Central Bank President Christine Lagarde said on Sunday that she was confident the ECB would get to its target of getting inflation back down to 2% and was confident over Europe’s gas reserve situation.

“The key ECB interest rates have reached levels that, maintained for a sufficiently long duration, will make a substantial contribution to the timely return of inflation to the target,” Lagarde said in a French newspaper interview.

Lagarde added that because inflation was “currently falling significantly,” she was not pessimistic regarding the short-term economic outlook. She added that economic reforms were underway in Europe, and its gas reserves situation had improved.

“Structural reforms are being put in place. And, just one year ago, who would have thought that we would succeed in replenishing more than 90% of our gas reserves by September 2023?” said Lagarde.

“This allows us to look towards the coming winter, if not calmly, then at least with a lot more confidence”. 

US job numbers last week came in almost double analysts’ expectations. An estimated 336,000 jobs last month were much higher than expected, according to Bureau of Labour Statistics data released Friday. The strength of the economy is a key reason why the central bank is expected to keep rates elevated. Consensus estimates from economists were for 170,000 net jobs added and a jobless rate of 3.7%.

“The job market is tinder-box hot,” said Sung Won Soh, professor of finance and economics at Loyola Marymount University.

FOMC minutes this week may not hold much surprise, but there will be a release of inflation figures. Those are also not having the same effect, as the economy remains strong with inflation falling.

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