27.04.202309:00 Forex Analysis & Reviews: High inflation not only problem in eurozone

The euro climbed beyond its monthly peak, while the British pound was less fortunate. Demand for the euro remains strong amidst calls from European politicians to maintain aggressive policies in hopes of combating the highest inflation in recent decades.

However, this is not the only problem European politicians are grappling with. European Union finance ministers, who are gathering this week, are expected to discuss proposals to reform the bloc's spending rules. Some countries believe that they are overly strict and limit the actions of member states with higher debt levels.

Yesterday, the European Commission outlined proposals to reform the so-called "The Stability and Growth Pact," which sets limits on budget deficits and government debt. This does not correspond to German Finance Minister Christian Lindner's idea to impose strict debt reduction targets.

It is clear that Germany is tired of supporting other EU members burdened by high public debt and therefore advocates for a more restrictive approach. Finance ministers will also discuss disagreements over changing the terms of the banking union following proposals to ease the liquidation of troubled small and medium-sized banks that have problems.

Central bank governors will join the meeting over the weekend. According to economists, the Commission's recent attempts to resolve disagreements among member states have not been successful. Just after new proposals were announced on Wednesday, Lindner called a press conference, explaining that the proposals received from the Commission still required significant adjustments. Only a thorough examination and analysis of the proposed terms will allow the countries to cope with the high deficit.

Other member states have expressed concerns that new measures to restore finances and reduce debt obligations may undermine the enforcement of common rules, which do not take into account individual situations within troubled countries and leave no room for increasing investments. Notably, at the moment, six eurozone countries have debts exceeding 100% of GDP.

In any case, meetings of this kind are not new and occur regularly. Germany, as always, advocates for more targeted spending, while Italy and other troubled countries insist on an individual approach to this problem.

As for the technical picture of EUR/USD, bulls still have all the chances to continue the growth and update the monthly high. To do this, they should push the price above 1.1030 and take control of 1.1065. This will allow the pair to break the 1.1095 limit. From this level, it is possible to climb to 1.1130. If the trading instrument declines, major buyers will become active only around 1.1030. Otherwise, it would be better to wait for the update of the high of 1.0990 or open long positions from 1.0960.

Meanwhile, the technical picture of GBP/USD shows that bulls continue to control the market. To develop the trend, it is necessary to take control over 1.2490. Only a breakout of this level will strengthen the hope for further recovery to the area of 1.2520. In the event of this, the price may surge to the area of 1.2545. In case of a decline, bears will try to take control of 1.2455. If they succeed, a breakout of this range will negatively affect bulls' positions and push GBP/USD to the low of 1.2420 with the prospect of reaching 1.2380.