On April 15, European Central Bank President Christine Lagarde indicated that rising energy costs have shifted the eurozone economy away from the ECB's baseline scenario, though current conditions are not sufficient for policymakers to consider raising interest rates. Speaking at the IMF Spring Meetings in Washington on Tuesday, Lagarde noted that due to conflicts in the Middle East, the European economy is positioned between the central bank's baseline and stress scenarios. When asked whether this implies a shift toward tighter monetary policy, Lagarde denied the suggestion, stating, "Our policy compass is anchored in price stability while maintaining financial stability." Against the backdrop of a six-and-a-half-week conflict in the Middle East that has driven up oil prices and dampened economic confidence, the ECB is carefully evaluating its next policy steps. Eurozone inflation has significantly exceeded the 2% target, with the key issue being the persistence of current price increases.

Meanwhile, the International Monetary Fund warned that if Middle East hostilities keep international oil prices at $100 per barrel for the remainder of the year, global economic growth could slow to its weakest level since the COVID-19 pandemic. Under this "pessimistic scenario," the IMF projects global economic growth at just 2.5% in 2026—the lowest since 2020—with inflation rising to 5.4%, assuming crude oil spot prices remain near current highs. The previous day, Brent crude briefly climbed back above $100 per barrel after the U.S. announced plans to block the Strait of Hormuz. Before the Middle East conflict erupted and disrupted key shipping routes, oil prices were around $70 per barrel. IMF Chief Economist Pierre-Olivier Gourinchas noted that recent developments have pushed oil prices higher, "bringing us closer to the pessimistic scenario." He added, "More oil could be trapped in the Strait of Hormuz, unable to reach the market, further worsening the situation."

Key data to watch today include the U.S. Empire State Manufacturing Index for April, the U.S. Import Price Index for March, and Canadian Manufacturing Sales for February.

**Dollar Index** The dollar index fell yesterday, hovering near 98.10 after testing the 98.00 support level and hitting a six-week low. The decline was primarily driven by optimism over imminent Middle East negotiations, which reduced safe-haven demand for the dollar. Additional pressure came from diminished expectations of a Federal Reserve rate hike and weaker-than-expected U.S. economic data. Resistance is seen near 98.50, with support around 97.50.

**EUR/USD** The euro rose yesterday, briefly surpassing the 1.1800 level to reach a seven-week high, and is currently trading near 1.1790. The advance was largely supported by a weaker U.S. dollar, which faced headwinds from reduced safe-haven appeal, soft economic indicators, and fading Fed rate hike expectations. Positive economic data from Germany also provided some support. Resistance is eyed near 1.1900, while support lies around 1.1700.

**GBP/USD** The British pound climbed yesterday, reaching an eight-week high and currently trading near 1.3570. The rally was mainly fueled by a drop in the dollar index, which fell to a six-week low due to optimism around Middle East talks and disappointing U.S. economic figures. Expectations of a potential Bank of England rate hike later this year also underpinned the currency. Resistance is anticipated near 1.3650, with support around 1.3500.