On Friday, the Euro/Dollar exchange rate fell sharply and reached the support level of 1.2100. Demand for the US currency increased after the rise in US consumer prices in May and reached the highest levels in a week. Inflation in the United States immediately added 5%, but market participants are convinced that the Fed will keep its ultra-soft monetary policy unchanged.
The European Central Bank raised its forecasts for economic growth and inflation in the euro zone at a meeting on Thursday. The regulator also promised to keep the volume of securities purchases unchanged until the end of the summer. Price pressures in Europe remain subdued. Even after the upward revision of the inflation forecasts, the ECB does not expect the consumer price growth rate to reach 2% over the forecast horizon. As the euro zone economy is expected to strengthen significantly in the coming months, market participants expect the ECB to announce a slowdown in the pace of bond purchases from the fourth quarter of 2021 at its September meeting. In April, the region's retail sales rate was only 0.3% above the first-quarter average, and this contrasts with much stronger growth in the UK. The euro area's GDP level in the first quarter of the year was still 5.1% below the pre-pandemic peak in the fourth quarter of 2019. Although the situation has improved since then and the economy has gained some momentum, the underperformance is reflected in the business activity indices. In particular, the indicator in the services sector of the euro zone increased in May, but not strongly enough, as expected according to forecasts. As a result, the ECB may be cautious about reducing monetary stimulus in the near future.
Forex trading. Euro/Dollar EUR/USD forecast for today, June 14, 2021
The forecast expects a corrective growth of the Euro/Dollar exchange rate to the levels of 1.2120, 1.2140 and 1.2170.