Lack of Visibility The information presented in this publication is provided purely for informational purposes and does not constitute investment advice, a sales offer, or a solicitation to buy and should in no way serve as a basis or be considered an incentive to engage in any investment. The macro point Market operators were not convinced by the performance of the Chairman of the U.S. Federal Reserve (Fed) last week. While many believed it was necessary to lower rates or pause monetary policy, he increased the main rate by 25 basis points and did not rule out further increases. However, he acknowledged that the monetary policy path is uncertain. Fortunately, this is not the case everywhere else. 'All I know is that I know nothing' - Socrates. This could summarize J. Powell’s press conference last Wednesday. As expected, the U.S. Federal Reserve (Fed) raised its main policy rate by 25 basis points. Some market participants had expected a pause in monetary policy due to the possible repercussions of higher rates on the profitability of the U.S. banking sector (several regional banks are still struggling, such as First Republic). However, such a scenario was unlikely. Inflation remains the number one problem from a monetary policy standpoint. A majority of FOMC members (the body responsible for setting rates in the United States) still anticipate at least one or two more rate hikes of 25 basis points each to curb inflationary pressures. Only one member foresees a pause in monetary policy. However, no member envisions a rate cut. J. Powell confirmed that there is uncertainty about the short-term rate outlook. He nevertheless ruled out any possibility of a rate cut this year. Apparently, the message did not get through to financial markets. The money market anticipates four rate cuts for a total of 100 basis points as early as this year (with a rate-cutting cycle starting next June). Such a gap between the U.S. central bank’s forecasts and market expectations is unprecedented. This highlights how difficult it is to know how economic conditions will evolve in the weeks and months to come. This is obviously related to the banking sector’s difficulties that will lead to tighter credit. The impact on GDP is not clear. Historically, a significant credit tightening could either lead to a recession or a marked slowdown in growth. For now, let's remember that the U.S. Federal Reserve does not foresee a recession on the horizon. This is also our view (even though the risk of a recession has increased over the past fifteen days). Other central banks found it less difficult to communicate with financial markets last week. They remained steadfast (in other words, they continued to tighten monetary policy at the expected pace to fight inflation). Despite the troubles at Credit Suisse, the Swiss National Bank (SNB) raised its main rate by 50 basis points – as expected. It slightly revised upward its inflation forecasts to 2.4% this year and 2% in 2024. It also indicated it is once again prepared to intervene in the foreign exchange market if necessary. Many analysts are beginning to consider that the SNB might seek to slightly weaken the Swiss franc’s exchange rate to support economic activity (especially exports). At this stage, these are merely speculations. In any case, if the SNB decides to intervene massively in the foreign exchange market, it would be the first time since summer 2022. Meanwhile, Norway's central bank, the Norges Bank, increased its main rate by 25 basis points. Again, no surprise compared to expectations. Across the Channel, the increase was also 25 basis points (it's a good compromise between easing but still significant inflationary pressures and sluggish growth). The only surprise on the central bank front came from Taiwan last week. The country’s central bank raised its main rate by 12.5 basis points to 1.875% while the market consensus had expected it to hold steady. There are currently many discussions in trading rooms and among analysts about the possibility of rate cuts. But as seen with the decisions made in recent days, central banks have not yet changed their approach and are still trying to fight inflation, leaving the door open for new rate hikes before summer. The summer period will certainly be the right time for central bankers to assess the real state of the global economy. Technical point On the foreign exchange market, the euro/dollar experienced very high volatility last week. The pair fluctuated within a range of nearly 300 points. This is enormous and unusual. The Fed meeting initially benefited the euro (with the market betting on an upcoming rate cut in the United States). But traders quickly took their profits, causing the euro/dollar to fall from the 1.0930-35 zone below 1.08. The market is still shaky due to the lack of clear short- and medium-term prospects for US monetary policy (not to mention the troubles in the banking sector), which should favor safe-haven assets (particularly the US dollar). Moreover, the euro ended last week lower against most of its counterparts (except the Canadian dollar), proving that the market is more in 'risk aversion' mode. The supports and resistances displayed below indicate the low and high points within which the rates should evolve during the week.Weekly SupportsWeekly ResistancesS2S1R1R2EUR/USD1.04881.06341.09321.1003EUR/GBP0.85140.86570.88710.8953EUR/CHF0.96300.97730.99731.0050EUR/CAD1.44501.46381.49741.5133EUR/JPY136.05138.10145.66147.80 Announcements to follow On the statistics front, a quiet week begins. The publication of the eurozone consumer price index in March is the main statistic to watch. The consensus predicts a decrease in inflationary pressures to 8.2% year-on-year versus 8.5% in February. This is a preliminary estimate. However, it is unlikely that the announced figure will be revised later. A reduction in inflation is welcome. However, the path remains long to reach a more sustainable level (around 3-4% year-on-year). Consequently, we continue to believe that in the short term the European Central Bank will continue to raise borrowing costs (probably with a 50 basis point increase of its main rate next May). Below you will find publications and events that should have a major impact on currency rate developments.DayTimeCountryIndicatorWhat to expect?March 27, 202309:00GERIFO Business Climate Index (March)Increase to 91.2 against a previous estimate of 91.1.March 28, 202315:00USAConference Board Consumer Confidence Index (March)Rebound to 108.5 against 102.9 in the previous estimate.March 31, 202310:00EURConsumer Price Index (March)This is the preliminary estimate for March (thus important). The consensus predicts a drop to 8.2% year-on-year (compared to 8.5% previously).March 31, 202313:30USACore PCE Index (February)This is the most closely watched inflation barometer by the Fed. Consensus at 0.4% monthly change compared to 0.6% in January.