Faster, Stronger The information presented in this publication is communicated to you purely for informational purposes and does not constitute investment advice, a sales offer, or a solicitation to buy, and should in no case serve as a basis or be considered as an incentive to engage in any investment. The macro point We would have liked to share good news with you. But that is not the case. The latest statistics confirm that the economy is slowing down. The phenomenon is more pronounced in Europe, for now, than in the United States. Last week, the European Commission revised its growth forecasts downward for 2022 and 2023. The GDP in the eurozone is expected to increase only by 2.7% this year and 2.3% next year (compared to an estimate in February of 4.0% and 2.8% respectively). The economic landing is quite painful. It is likely that the estimate for 2022 will be revised downward again in the coming months. In most European countries, salary increases are not sufficient to offset the rise in inflation. According to a study published a few days ago by the Banque de France, salary increases should reach, on average, 3% this year in our country after stagnating from 2014 to 2020 (+1% on average). Recall that inflation in April was at 4.8% on an annual basis. It is expected to exceed 5% in May. French households are therefore experiencing a loss of purchasing power, like their counterparts in other European countries. In the United Kingdom, the situation is worse. The consumer price index jumped by two percentage points in one month, from 7% in March on an annual basis to 9% in April. This is obviously unusual. This explosion is mainly due to an upward adjustment of the energy bill in the UK (+53% in April). The Bank of England has already warned that inflation is expected to reach double digits this year and that it will be very difficult to return to the official target of 2%. It has been very pessimistic about the surge in food prices which could lead to significant impoverishment of the most modest. In the short term, the central bank certainly has no choice but to accelerate the process of tightening monetary policy. The next meeting is scheduled for June 16th. It is widely agreed that an increase in the key interest rate of 50 basis points is likely, from 1% to 1.50%. However, a rapid tightening could plunge the country into recession. This is a real risk that has been mentioned many times in recent weeks by the Governor of the central bank, Andrew Bailey. In the United States, the economic outlook is still good. The country experienced a much more powerful and rapid GDP rebound than European countries after COVID. This is an important stabilizing factor. The retail sales figure in April (published at the beginning of last week) confirmed that domestic demand is still well-oriented, despite problems related to inflation. Automotive sales pushed retail sales upwards. Furthermore, many American households have a sufficient level of savings (accumulated during the pandemic) to cope with rising prices in the short term. The good state of the American economy will obviously give the US Federal Reserve (Fed) more latitude to normalize its monetary policy. Fed Chairman Jerome Powell again confirmed that two rate hikes of 50 basis points each (in June and July) are planned. It is likely that a similar-sized increase will also take place in September. Some members (a minority within the FOMC which sets interest rate policy) are considering a more aggressive action if necessary (a 75 basis point increase). This would be unusual. In any case, the speed with which the Fed exits the ultra-accommodative policy of the COVID era should continue to push the US dollar higher in the foreign exchange market. The dollar index, which measures the evolution of the greenback against a basket of major currencies, has slightly decreased in recent sessions but remains close to its highs of 2020 (at the time of the first global lockdown). At Mondial Change, we believe that the rise will persist in the medium term. A world where the dollar is generally high is usually a world where economic disparities and financial tensions increase (some developing countries are already on the brink of bankruptcy or in bankruptcy, like Sri Lanka). Consequently, the coming months are expected to be complicated and turbulent. There will clearly be no upward exit from the pandemic period. In the foreign exchange market, the euro rebounded against the dollar last week (+1.6% in weekly variation). The underlying trend remains bearish. The monetary policy differential between the two sides of the Atlantic will continue to favor the US dollar in the medium term. But we could have a continuation of the rebound in the very short term towards the 1.0650-1.0700 zone. It would continue to be fueled by a relative calm on the geopolitical front (Ukraine is no longer really a concern for traders) and by recent comments from several European Central Bank members in favor of a rapid rate hike (likely in the summer).The supports and resistances displayed below indicate the low and high points within which rates should move during the week.SUPPORTSWEEKLYRESISTANCESWEEKLYS2S1R1R2EUR/USD1.03031.04201.07391.0957EUR/GBP0.81850.83200.85420.8608EUR/CHF0.99951.00671.04411.0640EUR/CAD1.31021.33021.37011.3901EUR/JPY132.27133.75137.70138.17The statistics expected this week should not cause any particular effect on exchange rates. They will simply confirm the trends that have already been well integrated into prices: risk of stagflation for some countries like Germany and persistent strong inflation for all others. The minutes of the last meeting of the US Federal Reserve should not provide any additional elements compared to the recent statements by J. Powell. The trajectory of American monetary policy is clear at least for the next two months.Below you will find the publications and events that should have a major impact on the evolution of currency rates.DAYTIMECOUNTRYINDICATORWHAT TO EXPECT?23/0510:00IFO Business Climate Index (May)Expected decrease to 89.1 against 91.8 previously.24/0516:00New Home Sales (April)Slight decrease to 755k against 763k previously.25/0520:00Minutes of the last US Federal Reserve meetingNo surprises a priori. The central bank will raise its key rate by 50 bps again next June.26/0514:30GDP in the first quarter (new estimate)-1.3% against -1.4% in the first estimate.