Bonda Asia: Economic Data Shows Weak Performance, US Dollar Index Slightly Falls

On April 7th, European Central Bank Governing Council member and Bank of Greece Governor Yannis Stournaras stated on Monday that the appropriate monetary policy stance in the eurozone will depend on the scale and nature of the energy supply disruptions caused by the Middle East conflict. He indicated that if the surge in energy prices proves to be temporary, the need to adjust monetary policy will be limited. He added that if the pressure from rising energy prices is stronger, longer-lasting, and affects medium-term inflation expectations and wage growth trends, a more tightening monetary policy stance is expected to be necessary. Recently, several ECB policymakers have spoken out about policy prospects. ECB Governing Council member and Bank of Estonia Governor Madis Müller said that if the Middle East war leads to sustained high oil and natural gas prices, he cannot rule out the possibility of rate hikes at the April policy meeting. Müller stated, “It’s hard to say what state we will be in by the end of April. If energy prices remain high for a long period, we certainly cannot rule out the possibility of adjusting interest rates as early as April.”

Additionally, International Monetary Fund (IMF) Chief Kristalina Georgieva said on Monday in an interview with Reuters that the Middle East conflict will lead to rising inflation and drag down global economic growth. Before the IMF plans to release its global economic forecasts next week, the official warned that due to Iran effectively blocking the crucial Strait of Hormuz, which transports 20% of the world’s oil and gas, this conflict has triggered the most severe disruption in global energy supply in history, forcing millions of barrels of oil production to halt. Georgieva stated that even if the conflict is resolved quickly, the IMF is prepared to lower its economic growth forecasts and raise inflation expectations. She admitted that prior to the outbreak of the conflict, as economies worldwide continued to recover from the pandemic, the IMF had initially expected to slightly raise its global growth forecasts for 2026 at 3.3% and 2027 at 3.2%.

Today’s key data releases include the Eurozone April Sentix Investor Confidence Index, the UK March S&P Global Services PMI Final, the US February Durable Goods Orders Monthly Rate Preliminary, and the US March New York Fed 1-Year Inflation Expectations.

Dollar Index

The dollar index declined slightly yesterday, closing lower on the daily chart, with the spot price trading around 100.10. Aside from profit-taking exerting some downward pressure, the weak economic data released in the US during the period also contributed to the decline. Additionally, easing geopolitical tensions provided some downside pressure. However, expectations of Federal Reserve rate hikes limited the scope for the dollar’s decline. Today, focus on resistance around 100.50, with support near 99.50.

EUR/USD

The euro rose slightly yesterday, closing higher on the daily chart, with the spot price trading around 1.1540. Besides short covering and technical buying near the 1.1500 level providing some support, the dollar’s decline due to weak economic data also supported the euro. Moreover, signs of easing geopolitical tensions further supported the currency. Today, watch for resistance around 1.1650, with support near 1.1450.

GBP/USD

The British pound rose slightly yesterday, closing higher on the daily chart, with the spot price around 1.3230. In addition to short covering providing some support, the weakening dollar amid weak economic data and a warming risk sentiment also contributed to the pound’s rebound. However, cooling expectations of rate hikes by the Bank of England limited the rebound potential. Today, focus on resistance around 1.3300, with support near 1.3150.