All is well...but not everywhere The information presented in this publication is communicated to you for purely informative purposes and does not constitute investment advice, an offer to sell, or a solicitation to buy, and should in no way serve as a basis or be considered as an incentive to engage in any investment. The macro point All is well... but not everywhereMacro pointOverall, the economic horizon is clear. Activity is picking up almost everywhere in developed countries, which is expected to lead to accelerated growth in the third and fourth quarters both in the United States and the eurozone. According to the latest economic forecasts of the European Central Bank (ECB), unveiled a few days ago, GDP in the Monetary Union is expected to grow by 4.7% this year and inflation, although expected to rise slightly, should remain far from the risk zone defined by economists around 2.5%-3.0%. In the United States, positive signs of recovery are accumulating. The rapid rebalancing of the labor market continues. According to statistics released last week, the American economy experienced a record number of job openings in April, amounting to 9.3 million. By comparison, this is roughly the total number of unemployed. In addition, there is very encouraging momentum regarding vaccination, although the risk of a resurgence of the pandemic in September cannot be completely ruled out (a scenario mentioned by some epidemiologists based on the spread of the Indian variant). However, not everything is perfect. Even though the dreaded wave of business bankruptcies due to the pandemic did not occur and is unlikely to occur, pockets of fragility remain. In France, businesses have all resumed operations with very high debt and weak equity. In the coming years, their priority will be on debt repayment at the expense of investment, which could lead to a possible loss of competitiveness for the French economy. Furthermore, many businesses must also face the accelerated transformation of demand (in the construction sector in particular but not exclusively) and rising supply costs (which will negatively impact margins or be passed on to consumers). Outside developed countries, the situation is even more volatile. The risks are myriad: soaring food prices, threats on U.S. rates for dollar-indebted countries, rising poverty, difficulties in accessing vaccines, and risks of political destabilization. It is an explosive cocktail that could result in greater volatility of emerging currencies and a marked depreciation of these against major currencies (Euro and Dollar) in the future. Technical point The situation is quite different for major FX pairs (e.g., EUR/USD, EUR/GBP, EUR/CHF, etc.). Volatility on these pairs remains dramatically low. Last week, the EUR/USD cross remained stuck between 1.21 and 1.22 despite the ECB meeting, which is usually considered a significant market-moving event. We remain essentially in the same wait-and-see configuration as in previous weeks, with limited movements in the exchange rates of the main currencies. Another example: the EUR/GBP pair has moved within a range of just 70 points over the last five sessions. Implied volatility for the next three months is also low, indicating that the market does not expect disruptions this summer.The supports and resistances displayed below respectively indicate the low and high points within which the rates are expected to move during the week.SUPPORTSWEEKLYRESISTANCESWEEKLYS2S1R1R2EUR/USD1.18741.20241.22461.2325EUR/GBP0.84400.8500.86370.8682EUR/CHF1.07751.08221.10271.1095EUR/CAD1.44901.46021.48251.4937EUR/JPY131.53132.52134.49135.48For personalized advice on trends and currency hedges, contact our trading room: Announcements to follow Now that the ECB is behind us, traders' attention will now turn to the U.S. Federal Reserve, which is meeting for two days (Tuesday and Wednesday). This is a much-anticipated meeting by the market as it will set the tone for U.S. monetary policy in the coming months. Barring any last-minute surprises, the rates and various economic support programs that have been established or strengthened following the pandemic (particularly asset purchase programs) should remain unchanged. Several Federal Reserve members and the U.S. Treasury Secretary have been striving in recent weeks to convey the message that monetary policy is appropriate, despite the 'transitory' inflationary pressures observed over the past two months (as evidenced, for example, by the inflation figure for May published last week). The foreign exchange market seems to have thoroughly integrated the message. Therefore, the central bank meeting should be a low-volatility event for USD pairs, notably EUR/USD. Traders have understood that the real rendezvous for potential adjustments to rates or support programs will only occur at the end of August at the traditional Jackson Hole Symposium. This major event often serves as an opportunity for central bankers to convey important messages about changes in monetary policy. Thus, a nearly three-month window opens before us during which nothing is expected from central banks on either side of the Atlantic.Below you will find publications and events that are expected to have a major impact on currency rates.DAYTIMECOUNTRYINDICATORWHAT TO EXPECT?16/0608:00CPI (May)Previous at 1.5% year-on-year.14:30Core CPI (May)Previous at 0.5% compared to April.20:00Central bank meetingUnchanged monetary policy.17/0611:00CPI (May)The consensus expects a figure of 1.6% year-on-year versus 2% previously.14:30Philadelphia Fed Manufacturing Index (June)Expected to rise to 43.0 from 31.5 in May.Did you enjoy this content? Share it!