Growth & Economic Outlook
Outlook remains clouded by uncertainty, with consumers likely to hold back on spending.
Growth in Q1 is likely positive; defense spending seen boosting manufacturing.
Inflation & Monetary Policy
Wages are moderating, and domestic inflation is easing.
Strong EUR may reduce inflation; higher import costs could lift it.
ECB will define the appropriate policy stance using data, readiness, and agility.
Policy Stance & Communication
ECB will undertake intense scenario analysis in coming weeks.
The neutral rate is only applicable in a “shock-free” world, which we're clearly not in.
Trade, Tariffs & FX
ECB is sticking to forecasts despite tariff risks.
On U.S. trade tensions, the EU’s most obvious response is a zero-for-zero tariff deal.
Stimulus & Additional Measures
ECB will act if needed, but currently believes the adjusted policy path is appropriate.
Geopolitical risks, particularly around trade, are major sources of uncertainty.
Lagarde admitted she cannot say if we are at the peak of uncertainty.
The sellers had their shot. They missed. It would take a move below the 100 hour MA and stay below. The strength in the EURUSD comes despite a Fed that is happy to wait and see, while the ECB is happy to cut.
Of course, Pres Trump is now railing on the Fed chair and can't wait to replace him.
This article was written by Greg Michalowski at www.forexlive.com. Read More Details
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