Decoupling is Confirmed The information presented in this publication is provided for informational purposes only and does not constitute investment advice, a sales offer, or a solicitation to buy, and should under no circumstances serve as a basis or be considered an inducement to engage in any investment. The macro point The decoupling is confirmedMacro pointIt's confirmed. Global growth this year will be faster than initially expected, but it will also be more uneven. At the occasion of its traditional spring meeting, the International Monetary Fund (IMF) released the latest update of its economic forecasts for 2021 and the following years. The exercise is complicated. Many uncertainties remain, particularly regarding the speed of vaccination in several countries. What is certain at this stage is that it is the economies of China and the United States that will emerge strengthened from the pandemic. It is reminiscent of what took place after the financial crisis of 2007-08. The American takeoff is expected to be impressive. Taking into account the effect of the Biden stimulus plan, the American economy is expected to experience a growth spike close to 7% this year. Inflation should be controlled (2.5%), unemployment quickly falls below the 4% threshold, and GDP should exceed pre-crisis projections as early as next year. This anticipated success will continue to attract foreign capital to the United States and structurally support the US dollar exchange rate, as we have been indicating for several weeks. The Chinese economy is also expected to be in good health. According to the IMF's forecasts, in 2026, the GDP per capita in China is expected to be one-third of that in the United States. The catching-up process that started in 2000 continues at a pace of one convergence point per year over the next five years. Conversely, the outlook is much less positive for the eurozone and its member countries. For example, France is not expected to be able to regain the productive capacity lost due to the crisis before several years. Additionally, there is a public deficit expected to remain durably high (around 3.5% according to the IMF in 2026) and a level of public debt that is unlikely to decrease (around 117% of GDP in 2026). The European recovery is hampered by a vaccination campaign that is too slow but especially by a much more timid fiscal stimulus. The other macroeconomic news last week was the release of the minutes of the latest FOMC meeting of the US central bank. It should be noted that its members praised the Biden administration's stimulus plan, which "exceeds" their expectations. Despite strengthened growth prospects, they do not anticipate any change in monetary policy in the short to medium term, which is likely to reassure forex traders. The foreign exchange market is facing an almost ideal macroeconomic scenario: strong expectations regarding the upcoming economic rebound and simultaneously maintaining an ultra-accommodative monetary policy. Technical point On the foreign exchange market, volatility remains contained on the main currency pairs (except for the EUR/GBP last week). It should be noted that the fundamental upward trend of the US dollar continues. In the first quarter, the USD appreciated against the main G10 currencies (referring to the ten largest world economies). The only exception to the rule: the Canadian dollar, which benefited during the period from the surge in oil prices. This movement towards the greenback is likely to last in the medium term. For the EUR/USD, this means that our target at 1.16 is still in sight. The pair saw a slight rise around the 1.19 area in recent sessions, but the fundamentals in the eurozone remain negative compared to those of the United States.As for the EUR/GBP pair, there was a sharp jump in volatility last week. During the session on April 6th, intraday volatility reached 1%, the highest level since the beginning of the year. The pair first hit an annual low around 0.85 before rebounding strongly above 0.86. It seems these fluctuations reflect a repositioning of foreign exchange traders and also speculations regarding a possible catch-up by the eurozone with the UK in vaccination. In the medium term, we remain bearish on the EUR/GBP. Our first target is at 0.8430 before potentially extending the decline towards the lows of 2019 and 2020 around 0.8281-0.8239.The supports and resistances displayed below indicate respectively the low and high points within which the prices should evolve during the week.SUPPORTSHEBDORESISTANCESHEBDOS2S1R1R2EUR/USD1.16621.17111.20001.2204EUR/GBP0.82810.84300.87000.8798EUR/CHF1.08851.09121.11251.1164EUR/CAD1.46501.47201.50871.5149EUR/JPY128.27129.21131.28132.79For personalized advice on currency trends and covers, contact our trading room: Announcements to follow Except for the ZEW economic sentiment index in Germany on Tuesday, which is a key indicator likely to cause some volatility on the euro pairs, the starting week should be relatively calm in terms of statistics. The few scheduled US indicators (core inflation in March and Philadelphia Fed manufacturing index in April) are not likely to change the market perception of the US economy. Therefore, it is unlikely to have a lasting surge in volatility on the EUR/USD pair in upcoming sessions.Below you will find the publications and events expected to have a major impact on currency rate developments.DAYHOURCOUNTRYINDICATORWHAT TO EXPECT?13/0411:00ZEW Economic Sentiment Index (April)Consensus at 74.0 against 76.6 previously.14:30Core CPI (March)Increase to 0.2% month-on-month15/0414:30Philadelphia Fed Manufacturing Index (April)Very strong decline expected to 41.3 from 51.8 previously.16/0411:00Annual CPI (March)Decrease to 0.9% against 1.3% previously.Did you like this content? Share it!