Wide Disparity The information presented in this publication is communicated to you purely for informational purposes and does not constitute investment advice, a sale offer, or a purchase solicitation, and should not be considered as an incentive to engage in any investment. The macro point Wide GapThe Macro ViewTwo diametrically opposed economic scenarios are unfolding before us. On one side, the United States and the United Kingdom continue their economic reopening process thanks to a successful and rapid vaccination campaign. At the current pace, the UK should have vaccinated 75% of its population by next June. This level will be reached by the United States in July. Moreover, the job market is seeing strong recovery in both countries. On the other side, continental Europe is closing further, with new restrictive measures implemented in several European countries over the last few days (Italy, Spain, France, Poland, etc.). The lockdown in Europe risks severely undermining consumer and business confidence. Hence the need not to pay too much attention to the various opinion surveys published recently, whose data was collected before the lockdown announcements (e.g. the sharp rise in Eurozone consumer confidence published last week). In all likelihood, the rapid spread of the UK variant (now accounting for approximately 80% of cases) will necessitate the current measures to persist at least until the end of April. If they extend into May, growth forecasts for the affected countries will likely need to be revised downwards (it is estimated that one month of lockdown induces a 0.3% drop in GDP over a year). The reopening of the economy should then be much more gradual than after the second lockdown to avoid a new surge of infections just weeks before the crucial summer season begins. Many European countries cannot afford another ruined summer season (particularly considering Spain, where tourism accounts for nearly 12% of the country's GDP). Fortunately, the expected launch in June of an EU 'digital passport' proving the holder's immunity should allow a restart of intra-European travel and save summer 2021. However, it is clear that the predictable growth gap in the second quarter between the Eurozone and the United States (but also between the Eurozone and the UK) will lead to market operators arbitrating. Many will place their assets where there is a return, thus rather in favor of the United States. This structural trend will strongly support the progression of the US dollar exchange rate in the coming weeks. Technical point We are still in a market environment favorable to the US dollar. The greenback has continued to progress against a basket of currencies (euro, New Zealand dollar, Australian dollar, pound sterling, etc.) amid low volatility. The US dollar is appreciating because market participants expect strong US growth and also expect interest rates to be raised earlier than anticipated by the US central bank (though this latter assumption is far from certain). Technical signals remain bearish for the EUR/USD medium-term. This reminds us of what happened with the pair in spring 2018. In these circumstances, we maintain our target rate at 1.16.The supports and resistances displayed below indicate, respectively, the lows and highs within which the rates should evolve during the week.SUPPORTSWEEKLYRESISTANCES WEEKLY S2S1R1R2EUR/USD1.14641.16001.20191.2204EUR/GBP 0.83560.84000.86880.8798EUR/CHF 1.08851.09501.11471.1234EUR/CAD 1.45001.45241.49371.5042EUR/JPY 125.86127.53131.10132.54For personalized advice on currency trends and hedges, contact our trading desk: Announcements to follow This week will be busier than the last for the foreign exchange market. From April 5 to 11, the spring meetings of the International Monetary Fund and the World Bank will take place. This annual meeting, held by videoconference this year due to the pandemic, is an opportunity for central bankers and major economic decision-makers to discuss the future of the world. Generally, interest is low. However, attention will be given to the latest economic forecasts (April 6) and Fed Chair J. Powell's intervention (April 8).In terms of statistics, the latest estimates on activity in the services and manufacturing sectors in March for the United States, the United Kingdom, and the Eurozone will be published throughout the week. The observed dichotomy between the manufacturing sector (benefiting from the Chinese recovery) and the services sector (still penalized by the restrictions) should be confirmed. Also note the publication of producer prices in the United States at the end of the week, though with lesser importance for the market.Below are the publications and events expected to have a major impact on currency rate developments.DAYTIMECOUNTRYINDICATORWHAT TO EXPECT?04/0516:00Non-manufacturing ISM Index (March)Another rise expected to 57.8 from 55.3 the previous month.04/0710:30Composite PMI and Services PMI (March)Still largely in expansion territory.04/0810:30Construction PMI (March)Sligh decrease expected to 51.0 from 53.3 previously.04/0914:30Producer Prices (March)Expected stable at 0.5% month-on-month change.Did you like this content? Share it!