Euro and pound rallied on Wednesday, thanks to Bundesbank President Jens Weidmann, who said that the European Central Bank may cut back its bond purchases soon. But during the press conference, ECB head Christine Lagarde did not mention any possible policy change, and instead hinted at the continuation of the current programs in order to sustain economic recovery. And next Thursday, the central bank will hold another meeting, during which the members will make cautiously optimistic forecasts. One example is GDP growth, which is forecast to climb by 0.3% in 2021 and 2022. As for the bond purchase program, it will most likely remain the same.

Meanwhile, US and China have taken another step towards the resumption of economic and trade negotiations. Yesterday, Finance Minister Janet Yellen and Deputy Prime Minister Liu He discussed possible actions on how to support a sustainable economic recovery, all while addressing important issues of mutual interest.

In short, both parties are trying to bridge the gap and resolve differences over trade and economic relations. However, the Biden administration retained most of former President Donald Trump's foreign trade policy towards China and has not resorted to any tariff cuts. There is also no evidence that the current administration is going to start a second round of negotiations on a trade deal, or to amend the agreement signed last January 2020.

Going back to the EU, the European Commission allocated € 748 million to Greece in order to ease the public debt of the country. It also asked authorities to maintain momentum and redouble efforts on addressing delays in reform programs. According to the EC, with the current changes, the ratio of Greece's public debt will decrease to 65% of GDP by 2060. Now it is at 208%.

In the US, Philadelphia Fed President Patrick Harker addressed the issue of inflation, affirming that prices may hike further due to problems in supplies and production. However, like other Fed members, he believes that it is not of great concern because apparently, "wages will level out as more people return to work." And in case of problems, the Fed has many tools to deal with inflation.

Following this, the Federal Reserve released the Beige Book, which indicated that mass vaccination allowed the US to have much stronger and faster economic recovery. The easing of restrictions also helped a lot, as it boosted consumer spending. However, problems in the supply chain, labor shortages and delays in delivery made it difficult to get products to customers, not to mention fueled the sharp increase in prices. The next publication of the report will be two weeks before the Fed policy meeting on June 15-16.

All this resulted in the massive jump in euro yesterday, and today a lot will depend on 1.2217 as going above it will set off a much higher increase to 1.2250 and 1.2290. But if the quote drops below 1.2190, euro will plunge to 1.2135, and then to 1.2085.

A number of macro statistics will also be released today, and they could, one way or another, shake the market. Strong reports will add support to euro, while weaker-than-expected figures will bring pressure back to the currency.