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Euro continued to trade upwards yesterday even though the US released strong reports on retail sales and employment.
Aside from that, the European Central Bank said bond purchases may decrease starting this July, which puts out the idea that assistance programs may be curtailed earlier than expected. In fact, Francois Villeroy de Gallo, governor of the Bank of France declared that the ECB could end its emergency relief programs in March next year, although it doesn't mean that the central bank will tighten its monetary policy.
According to the members, there is still no reason to adjust the monetary policy since the clearer picture of the economy will be available only by June. And right now, everything is unstable because COVID-19 incidence continues to increase in many states, forcing authorities to implement strict isolation measures, which halts activity in many, if not all sectors. Analysts project that recovery will begin only at the end of the second quarter.
In this regard, the outlook for the euro has turned down, although growth may be seen if bullish traders manage to push the quote above 1.1980. Such could set off a larger jump towards 1.2050 and 1.2110, but if the bears manage to bring the euro back to 1.1940, then the price will most likely collapse to 1.1910 and 1.1880.
As for GBP / USD, going above the 38th figure will lead to a further increase towards 1.3840 and 1.3875. But if the bears push the quote below 1.3750, then the pound will most likely drop to the 37th figure.
Going back to macro statistics, the US Department of Labor reported that jobless claims in the country only 576,000 this last reporting week, instead of the expected 700,000.
Inflation also increased, mainly due to consumers stepping up their retail spending by nearly 10%. To be more specific, retail sales jumped by 9.8% this March, the largest monthly increase since May last year. Many expect this scenario to trigger a more active economic growth this year.
Industrial production also jumped, by around 1.4%. However, analysts forecast a slight slowdown in the coming months, when the service sector returns to full operation. Apparently, supply problems will hold back activity in both sectors.
As for manufacturing activity, the New York Fed reported that it grew to 26.3 points this month, exceeding the 20 points forecast of economists. Obviously, this sector is recovering continuously since July 2020.
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