Summary:
- Villeroy speaks in London on Brexit and European inflation
- “ECB still not at inflation goal”
- Euro edging higher after PMI beats
ECB policymaker Francois Villeroy has delivered a speech in London today during which he made several notable comments.
Key highlights from the speech were:
- Eurozone recovery broad based and robust
- Rise in global debt is threatening growth
- UK banks cannot expect to gain EU passport control without accepting single market rules
- Happy about latest Eurozone data improvement
- Eurozone inflation still below target but much better than 18 months ago
- ECB is still not at inflation goal, we must maintain an ample degree of stimulus
Overall the comments are fairly upbeat, highlighting the latest PMI data as a pleasing development and calling the Eurozone recovery “broad based and robust”. The remarks on UK banks are unsurprising and will come as no great shock. On monetary policy Villeroy errs on the dovish side but not too strongly and the Euro remains slightly higher on the day after his speech.
There has been no discernible reaction in the market to Villeroy’s comments and the Euro remains a little higher on the day. Source: xStation
The EURUSD has risen back near its highest level in a month following the better than expected PMI releases and the market is now testing a potentially key level around 1.1860. This region has acted as resistance on several occasions recently but a break above here could see a resumption of the uptrend. An inverse head and shoulders setup may also be in play with the neckline at 1.1860. Price has broken out of a falling trendline from the 2017 highs and is looking to make another push higher.
The EURUSD is approaching prior resistance at 1.1860. A clean break above here would pave the way for further gains. Source: xStation