Super Mario Makes His Comeback The information provided in this publication is purely for informational purposes and neither constitutes investment advice, a sales offer, nor a purchase solicitation, and should under no circumstances serve as the basis or be taken as an incentive to engage in any investment. The macro point Super Mario makes his comeback The macro point Super Mario is back. The former president of the European Central Bank (ECB) Mr. Draghi has been called to Italy's side after failed negotiations to create a coalition government around the outgoing Prime Minister G. Conte. Italy is heading towards its third technical government in thirty years. The most recent technical government was that of Mr. Monti (2011-2013). Market operators remember it fondly as it managed to restore investor confidence in the country during the European sovereign debt crisis and successfully implemented several structural reforms, particularly regarding the labor market. If Mr. Draghi manages to form a government, his main mission will be to present a solid recovery plan to the European Commission, which will be funded directly by the European recovery plan, 200 billion euros of which are allocated to Italy (spread as follows: 120 billion euros in loans and 80 billion euros in grants). In Europe, inflation saw its largest jump in 20 years within the monetary union. In January, it reached 0.9% year-on-year compared to -0.3% in December. The 1.2-point increase is mainly due to cyclical factors (e.g., the end of the VAT reduction in Germany), meaning that inflation is set to fall again in the coming months. Under these circumstances, no change in the ECB's monetary policy is envisioned. Finally, the Bank of England (BoE) reviewed its economic support measures without making any modifications. As expected, the main policy rate remains at 0.1% and the asset purchase program stays as is. The central bank clearly ruled out the possibility of implementing negative rates (modeled after the ECB) despite this option being mentioned by the foreign exchange market several times in recent months. It is once again confirmed that monetary policy in major developed countries should remain on autopilot at least until the summer. It is now fiscal policy’s turn to take over firmly. Technical point On the currency market, the EUR/USD pair fell below the psychological threshold of 1.2000 last week. This decline is mainly due to the economic differential between the two sides of the Atlantic (U.S. outperformance versus contraction in the eurozone), rising U.S. long-term rates, and significant difficulties with vaccine deployment in the EU. Watch this week if the decline continues around the support area at 1.1877.There was also a resurgence of volatility in the EUR/GBP pair linked to the Bank of England's decision not to implement negative rates. The reaction of currency traders can be summed up in one word: enthusiasm. Weekly, the pound gained nearly 1.3% against the euro. Betting on a rapid improvement in the health situation across the Channel and a possible significant economic rebound, it's not excluded that the appreciation phase of the pound could continue in the medium term, with a target of 0.8500 for the EUR/GBP pair.The supports and resistances below indicate the low and high points within which rates should evolve during the week.SUPPORTSWEEKLYRESISTANCESWEEKLYS2S1R1R2EUR/USD1.18501.18771.21951.2250EUR/GBP0.85000.86740.89060.8952EUR/CHF1.06541.07281.09211.1000EUR/CAD1.51021.51561.55961.5640EUR/JPY123.19124.94127.77128.43For personalized advice on trends and currency hedging, contact our trading room: Announcements to follow This week will once again be calm on the macroeconomic front, with few notable indicators expected. In Europe, attention will mainly focus on inflation, with figures for Germany and Spain. The impact on the currency market will be close to zero. Finally, in the U.S., the most important indicator will concern the University of Michigan’s Consumer Confidence Index. It will be the first estimate for February. Despite the resurgence of the pandemic across the Atlantic, recent stimulus measures by the Biden administration are likely to support consumer morale in the coming months. Last point to monitor, the discussions around the formation of the government led by Mr. Draghi in Italy. Even if the exchanges are still in preliminary stages, everything seems to indicate that the discussions will be successful as there is broad consensus within the Italian political class in favor of this solution.Below are the publications and events that should have a significant impact on exchange rate developments.DAYTIMECOUNTRYINDICATORWHAT TO EXPECT?10/0208:00Consumer Price Index (January)Increase to 0.5% monthly change.12/0216:00Michigan Consumer Confidence Index (February)Previous figure at 79.0 for January.Did you like this content? Share it!