FX.co ★ 18.04.2924: Massacre of USD delayed. EUR finds itself in crossfire. S&P 500, EUR/USD, Brent crude

Financial leaders from the G7 and G20 countries are taking part in the International Monetary Fund summit currently taking place in Washington. Therefore, the information environment is full of comments by representatives of the world's major central banks.

But even for such a high-profile forum, a tripartite statement is quite rare. Recognizing concerns about the recent sharp decline in the yen and won, the finance ministers of the US, Japan, and South Korea even allowed the possibility of joint forex intervention.

Some experts have already called this statement the beginning of a bloody massacre of the US dollar. After all, the central bank of China also confirmed its commitment to a stable yuan.

Besides, comments from ECB President Christine Lagarde and Bank of Portugal Governor Mario Centeno cast doubt on the scale of rate cuts in the eurozone.

Mario Centeno said that "several" cuts are possible this year and that monetary policy would remain tight even after the key interest rate is cut by 25 or 50 basis points.

Christine Lagarde is also seriously concerned about the weakening of the euro against the US dollar and that in the current situation, the eurozone will be at risk of protracted high inflation. The Bank of Japan, as we have repeatedly mentioned, is ready to intervene against the US dollar at any time.

How does the American currency respond to this? Of course, large-scale forex interventions may stall the greenback’s growth for a while, but a bearish trend for the US dollar looks unlikely. That is, the dollar index, which determines its value in relation to six peer currencies, of course, went down.

At the same time, the index still did not go far from its recent high of 106.5. Today, the intraday corridor for the US dollar index is seen within 105.7 and 106.0 and looks more like consolidation than a retracement.

Let me remind you that the greenback strengthened most of all due to alarming geopolitics and sticky inflation in the US. These factors have not disappeared now. They are just taking a back seat.

In the meantime, joint warnings from countries with the largest economies against excessive strengthening of the US dollar calmed down Wall Street, which recorded falling stock indices for four sessions in a row.

The S&P 500 also closed in the red on Wednesday. Today the S&P 500 is trading within an intraday corridor between 5,007 and 5,078.

Meanwhile, the US economy added further arguments in favor of the hawkish prospects of the Federal Reserve. The weekly report on initial unemployment claims remained at its previous level, thus confirming the stability of the labor market. Moreover, the manufacturing index published by the Philadelphia Fed excited markets. Its April reading of 15.5 turned out to be 10 times higher than the forecast of 1.5.

Regarding the outlook for the single European currency, some of the ECB policymakers do not agree with the opinion of Christine Lagarde. On the contrary, they believe that inflation in the EU develops as it should. That is, it has been going down at a brisk pace. ECB Vice President Luis de Guindos said that interest rates could be cut as early as June.

In this context, the euro/dollar pair found itself in the crossfire of opposing factors. After Christine Lagarde said that “the game is not over” with inflation, the euro turned 180 degrees. However, today fresh data on the US economy released in the early American session again influenced the pair.

As a result, the euro’s chart returned to yesterday's scenario, when the market was mostly trading sideways. But in any case, the strengthening of the euro could not completely remove the overbought greenback. It seemed that the euro had finally begun the long-awaited correction based on the support level of 1.06.