Watch ECB’s Lagarde for Comments on Policy Change

There’s a lot of anticipation and speculation surrounding this year’s Jackson Hole symposium, especially regarding the upcoming speeches by FED, especially Chair Jerome Powell’s speech, after his speech at the same symposium last year was the one when he announced the continuation of rate hikes to levels never seen before. Although the ECB President Christine Lagarde might steal the show.

Powell’s speech will be in about two hours, and it appears that many are expecting the FED chairman to maintain a cautious stance as economic indicators seem confusing lately as they point in both directions, possibly sticking to a ‘wait and see’ approach. There will definitely be some volatility during his speech, but Lagarde’s speech might have more impact on markets and particularly on Europairs.

Lagarde’s speech is set for 7 pm GMT, and she will be addressing the “European and Global Economy.” Given the recent leaks from ECB sources, there’s a growing belief that they might be considering an end to the rate hike cycle due to concerns about deteriorating growth prospects. However, these leaks could be seen as an attempt to manage expectations and minimize any surprise that might come from Lagarde’s speech.

The German Ifo survey, which was released this morning showed a decline from 87.4 points to 85.7 points.  That’s another strong sign of a potential economic slowdown, particularly in Germany. This could be adding to the case for the ECB to consider a more cautious approach as the European consumer is getting weaker, weighing on businesses.

There’s speculation that Lagarde might take a page from the FED’s playbook by slowing down the pace of rate hikes and possibly skipping a meeting. This might give them some room to maneuver, especially leading up to the October meeting where there’s a significant market expectation of a rate hike.

If Lagarde does indeed support such a scenario and signals a shift towards a less hawkish stance, it could send the Euro crashing a few cents lower. The market’s response to the initial leak suggests that investors might be more concerned than previously thought about economic growth prospects, and this sentiment could be exacerbated if Lagarde’s speech aligns with those concerns. We are already short on the Euro with two sell forex signals in EUR/GBP and EUR/USD.

EUR/USD Live Chart