It's Dizzying The information presented in this publication is provided purely for informational purposes and does not constitute investment advice, an offer to sell, or a solicitation to buy, and should not be used as a basis or considered as an incentive to engage in any investment. The macro point It was a grueling week. No fewer than three major central banks decided almost simultaneously to adjust their monetary policy. There were no surprises, however. They acted in line with expectations. Since the financial crisis of 2007-08, it's known that it's better not to take market players by surprise if one wants monetary policy to be fully effective. Across the Atlantic, the Federal Reserve (Fed) increased its key rate by 25 basis points. On this side, the European Central Bank (ECB) and the Bank of England (BoE) each raised it by 50 basis points. A minority of analysts (13 out of 25 surveyed by Reuters) feared that the BoE would go against the market with an increase of only 25 basis points. That was not the case. In the UK, the possibility of an imminent pause in the monetary tightening process is emerging. The severe recession expected, which could last almost five quarters according to central bank forecasts, encourages a cautious attitude. With a key rate now anchored at 4%, we can anticipate only one additional rate hike if inflationary pressures persist (probably around 25 basis points). In the eurozone, the short-term trajectory is clearer. The ECB's sole concern is tackling high inflation now that the prospect of a short-term recession is ruled out. Our scenario: the ECB will raise its main rate at least twice more, first by 50 basis points and then by 25 basis points, before pausing the rate hike process. In the United States, Fed Chairman J. Powell tried to be as clear as possible. Evidently, it was not a great success. He opened the door to at least two more rate hikes before the summer (so far, so good). But he also clearly indicated the need for caution regarding the inflation trajectory. In the past, central banks have too often made the mistake of declaring victory over inflation while it was still alive and well. This has hurt the credibility of central banks (a crucial point because it ensures the effectiveness of their actions) and has led to emergency measures often very damaging to the economy. Evidently, this part of the press conference was deliberately overlooked by market players. We looked this morning at investors' expectations regarding U.S. monetary policy: they expect the terminal rate to be slightly below 5% (while the central bank forecasts a rate slightly above this threshold) and above all they anticipate a rate-cutting cycle (yes! you read that right) starting from the second half of this year. Yet this is a scenario so far ruled out by the Fed. For interest rates to fall, the U.S. economy would need to enter a deep recession. This is unlikely. The economy shows incredible resilience, both in the construction sector (a major driver of activity) and the labor market (the unemployment rate has fallen to a low since 1969). Certainly, market players will need to revise their expectations in the coming months. When that happens, there will certainly also be a reallocation of currency positions (especially USD pairs). China was the last focus last week. It seems that support measures through access to greater liquidity are already bearing fruit. The manufacturing PMI index is back in expansion territory in January (at 50.1). The non-manufacturing PMI index (covering the services sector) experienced a larger rebound (at 54.4). This is important for Europe as if the Chinese economy returns to a strong pace in the coming months (this is the market consensus), it will directly benefit the eurozone (first Germany and to a lesser extent France). This could also definitively rule out the scenario of a global recession (which is still brandished by some analysts). In short, the evolution of the situation in China will have to be closely monitored in the coming months, now that the zero Covid policy that has so penalized activity is definitively lifted. On the foreign exchange market, the euro is down against three of its five main counterparts in weekly variation (against the U.S. dollar, Swiss franc, and Canadian dollar). The EUR/USD shows a decline over the past week of 0.53%. The pair is now around the area located around 1.08. Be careful, if it breaks through the support area located at 1.0734, we could see an acceleration of the decline. The euro will need to rebound in the coming sessions. Conversely, as we anticipated, the EUR/GBP is approaching the area located at 0.90. The GBP is still penalized by the prospect of a deep recession in the UK and the woes of the energy crisis. Nothing new at this stage. The weekly performance of the pair is moreover impressive: +1.92%. There will certainly be short-term profit-taking. But the trend remains upward. The two areas to watch for market players are located at 0.9039 and 0.9117. The supports and resistances displayed below indicate the low and high points within which the rates are expected to move during the week.Weekly SupportsWeekly ResistancesS2S1R1R2EUR/USD1.06011.06601.07931.0860EUR/GBP0.86360.87610.90120.9135EUR/CHF0.96260.97700.99681.0063EUR/CAD1.41681.42921.46901.4890EUR/JPY136.35138.88143.92146.95It is a calm week starting. And that's good news. The consumer price index (CPI) in Germany for January is announced this Friday. As in several other eurozone countries (Belgium, Spain for example), a rebound in inflation is likely. However, this statistic will have no effect on the foreign exchange market. Indeed, the CPI for the entire eurozone was published last week (at 8.5% annually). Due to the expected lull on the statistics front, we expect low volatility on the main currency pairs. Below you will find the publications and events that should have a major impact on the evolution of currency rates.DayTimeCountryIndicatorWhat to expect?02/06/202310:30UKConstruction PMI Index (January)Increase to 49.6 against 48.8 in December.02/10/202314:00DEConsumer Price Index (January)As in most other European countries, inflation is expected to rise (9.2% annually).02/10/202314:30CAEmployment Figures (January)Consensus at 8k.