Bitcoin 
Ethereum 
Tether 
XRP 
BNB 
USDC 
Solana 
TRON 
Lido Staked Ether 
Figure Heloc 
The energy supply shock has had a large impact on near-term inflation compensation in the euro areaLonger-term inflation compensation had remained broadly stableDespite strong increases in spot prices for oil and gas, it was argued that energy markets could still be seen as rather sanguine about the situationThe strong backwardation of futures prices seemed to suggest that a normalisation of global oil and gas supply within the next few months remained a realistic prospectHowever, even if there was a rapid resolution of the conflict, it could still take several months for supply through the Strait of Hormuz to be fully restoredOverall, the war was creates significant uncertainty and constitutes a negative supply shock, pushing up inflation and dampening economic activity in the coming monthsMembers assessed that the risks to the growth outlook were tilted to the downside, especially in the near-termMembers assessed that the risks to the inflation outlook were tilted to the upside, especially in the near-termWith respect to the communication of the scenarios, members agreed that the baseline, adverse and severe scenarios should all be publishedIt was agreed that ECB staff would regularly update the scenario analysis with new informationThe implications for medium-term inflation were very hard to gauge at this stage, partly because of fundamental uncertainty over the evolution of the war and highly volatile energy marketsBut all members viewed the risks surrounding the inflation outlook as tilted to the upside relative to the baseline staff projectionsIt was highlighted that the risk of second-round effects was state-contingentOn monetary policy, the option value of waiting was high on this occasion and it was therefore appropriate to leave policy rates unchangedMeeting-by-meeting and data-dependent approach still allows for sufficient flexibility to react at short notice if necessaryFull account,
This article was written by Justin Low at investinglive.com.
💡 DMK Insight
The energy supply shock is shaking up inflation expectations in the euro area, and here’s why that matters for traders right now: With spot prices for oil and gas surging, traders need to watch how this affects inflation compensation metrics. The current backwardation in energy markets suggests that while immediate supply concerns are pressing, longer-term outlooks remain stable. This could lead to volatility in related assets, especially those tied to energy stocks and commodities. If inflation expectations rise sharply, central banks might respond with tighter monetary policy, impacting forex pairs like EUR/USD. Keep an eye on key technical levels in these pairs, as a break below recent support could trigger further selling pressure. On the flip side, the market’s sanguine attitude towards longer-term inflation could be misleading. If energy prices continue to rise, we might see a shift in sentiment that could catch many off guard. Watch for any shifts in the backwardation trend, as a move towards contango could signal easing supply concerns and impact trading strategies across the board.
📮 Takeaway
Monitor EUR/USD closely; a break below key support levels could signal increased volatility driven by inflation fears.
