Fed's Goolsbee: inflation has not been great. Job market is pretty much stable

What the desk is arguing

The desk frames this as a critical moment for the Fed, balancing a stable job market against rising inflation pressures. Goolsbee's remarks highlight that while employment conditions are stable, inflation has not improved and is trending in the wrong direction, suggesting that the Fed's previous progress on inflation has stalled.

Supporting this view, Goolsbee noted that inflationary pressures are not solely driven by energy prices but were already elevated prior to recent geopolitical tensions. This reinforces the idea that the Fed must remain proactive in monitoring inflation indicators, as the potential for one-time shocks could complicate their policy framework.

Where it sits in our coverage

Our consensus target for the EUR/USD is set at 1.075, with a range spanning from 1.04 to 1.12. Notable firm targets include: - jpmorgan: 1.10 (Mar26) - bofa: 1.04 (Mar26)

This perspective aligns with jpmorgan, which sees a stronger EUR/USD, while bofa holds a more bearish view at the lower end of the range. The desk's outlook is positioned near the midpoint of the consensus spread, indicating a balanced view on the currency pair amid mixed economic signals.

How other firms see it

Firms like jpmorgan and citi share a similar outlook, emphasizing the need for the Fed to remain vigilant on inflation, which supports a stronger EUR/USD forecast. Conversely, bofa and goldman express caution, suggesting that the current economic indicators could lead to a more dovish stance from the Fed.

Key pairs to watch include EUR/USD, which is closely tied to the Fed's monetary policy trajectory, and USD/JPY, where shifts in U.S. interest rate expectations could create spillover effects. Additionally, the upcoming inflation data will be crucial in shaping market sentiment going forward.