FX.co ★ IMF ready to provide assistance to all in need

As the risk of a new global energy crisis gathers momentum, the International Monetary Fund has said it stands ready to assist countries facing balance-of-payments problems amid heightened uncertainty caused by the Middle East conflict. The unstable geopolitical environment, which is driving another rally of energy prices, threatens the economic stability of many nations, especially those that depend on imported oil and gas. In these difficult circumstances, the IMF said it is prepared to act as a stabilising force, offering financial support and policy advice to mitigate the fallout.

The Fund's statement emphasises that the current situation requires a comprehensive approach. In addition to emergency financing, the IMF is ready to help design longer-term strategies aimed at diversifying energy sources and strengthening economic resilience. Special attention will be paid to emerging markets and developing economies, which are typically most vulnerable to external shocks.

IMF Managing Director Kristalina Georgieva said she expects demand for the Fund's programmes to rise, particularly given a decline in foreign assistance. She noted that roughly 50 countries already rely on the IMF to meet balance-of-payments needs. "Some of our members, experiencing severe balance?of?payments difficulties, are already turning to us," Georgieva said on Friday. "We are ready to act. We recognise our responsibility in this uncertain world to be a pillar of stability."

She expressed concern about some Pacific island countries that are among the most exposed to disruptions in global oil supplies. Low?income, high?debt countries could also come under pressure, she warned. According to Georgieva, a sustained 10% rise in energy prices over a year would add about 40 basis points to inflation and shave roughly 0.2 percentage points off economic growth.

The IMF believes central banks should prepare for the consequences of a potential oil shock — both for consumer prices, which could spur higher inflation, and for currency weakness, which could make servicing external debt more costly.

Just yesterday, Georgieva warned that we live in a world of increasingly frequent and unexpected shocks, and the Middle East war is the latest example. She urged policymakers to prepare their economies for potential challenges that go beyond traditional policy concerns, including disruptive technologies and trade conflicts.

Technical outlook for EUR/USD

Buyers now need to reclaim 1.1635. Only that will allow a test of 1.1670. From there, the instrument could reach 1.1710, but doing so without support from major players will be difficult. The most distant upside target is 1.1745. On the downside, I expect significant buyer interest only around 1.1590. If no buyers show there, it would be prudent to wait for a new low at 1.1550 or open long positions from 1.1525.

Technical outlook for GBP/USD

Pound buyers need to take the nearest resistance at 1.3380. Only that would allow targeting 1.3420, above which a further breakout will be hard. The most distant upside target is 1.3453. On the downside, bears will try to seize control at 1.3344. If they succeed, a break of that range would deal a heavy blow to the bulls and could push GBP/USD down to 1.3300 with the potential to extend to 1.3255.