(News Bulletin 247) – A few good benchmarks, likely to relieve the markets, on the consumer front on Friday (U-Mich of confidence, retail sales), allowed the markets to find some air, without provide fertile ground for risk appetite. What nevertheless further fuel the technical rebound made since the rebound on the parity. The good start to the quarterly ball, especially across the Atlantic, and specifically in the banking sector, will have brought oxygen to so-called risky assets, of which equities and the single currency are prominent members.
On the pure monetary policy side, “no member of the US Federal Reserve or the ECB is expected this week, but Christine Lagarde should announce the first rate hike in more than 11 years on Thursday”, notes Vincent Boy, Market Analyst at GI France. “The ECB is keeping an ultra accommodative policy and despite inflationary pressures and the sharp drop in the euro, the first hike should only be 25 bps.”
“In addition, the institution could announce a new support system to reduce the impact of rate hikes on the debts of certain States. The euro could face another risk this week with the return to service of Nord Stream 1 expected Thursday. Little additional information on this point compared to last week, but observers still fear a delay in the restart, or even a lack of date for the resumption.
At midday on the foreign exchange market, the Euro was trading against $1.0150 about.
KEY GRAPHIC ELEMENTS
A “contrarian” attitude (against the current) is to be adopted to play the scenario of a powerful rebound of contestation in the direction of the 50-day moving average (in orange), without doubting the bearish framework of bottom.
MEDIUM TERM FORECAST
In view of the key graphic factors that we have mentioned, our opinion is positive in the medium term on the Euro Dollar (EURUSD) parity.
Our entry point is at 1.0143 USD. The price target of our bullish scenario is at 1.0429 USD. To preserve the invested capital, we advise you to position a protective stop at 1.0028 USD.
The expected return of this Forex strategy is 286 pips and the risk of loss is 115 pips.
CHART IN DAILY DATA
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