(News Bulletin 247) – In the context of fears related to the consequences of the spread of the new Omicron variant on the global economic recovery, and while inflation is taking hold on both sides of the Atlantic, appetite for the risk remained very tight at the heart of the week. The bearish bias of the Euro against the Dollar was not denied.
This variant, about which scientists still know very little, is a thorn in the side of the big “money-makers” of the planet, who for the main ones, are just beginning their path towards monetary normalization. Another part of the equation is inflation that sets in.
Federal Reserve boss Jerome Powell again cast a chill by acknowledging, in response to a question about the appropriateness of retaining the term “transient” to qualify the current spike in inflation, that the time has come to withdraw that word. … For the president of the Fed, recently chosen for a second term, if the price increases are broadly linked to supply problems, these increases have spread more globally and the risk of durably higher inflation s ‘is increased. In other words, it is a bit of the whole scenario put forward in recent months that has been demolished, and the banker recognizes that we will have to discuss a more rapid withdrawal of unconventional support measures, without even talking about a rate tightening.
The problem is serious on this side of the Atlantic as well. Published yesterday for the Euro Zone, inflation corrected for volatile elements comes out at an annual rate of 2.6%, against a consensus of 2.3%, and 2.0% for the final data of last month … Regarding the broadest product base, including energy in particular, prices jump 4.9%, according to EuroStat.
For now, the Dollar has retreated slightly against the Euro since last weekend, due to doubts about global crude demand for the coming months. Moreover, the statistical agenda did not help yesterday. Very clear disappointment to be noted on the other side of the Atlantic, with targets completely missed for the Chicago PMI which fell sharply to 61.8 and especially for the consumer confidence index (Conference Board), to 109.5. To follow this Wednesday the ISM manufacturing PMI in the United States at 4:00 p.m., just before crude stocks (4:30 p.m.).
In the immediate future, traders have just learned of the final data from industrial PMI indicators (surveys of purchasing managers) in Europe. For the Eurozone as a whole, the data hardly deviates from the consensus (58.4 against 58.6 in the first estimate for November). Chris Williamson, Chief Business Economist at IHS Markit, comments on the latest survey figures: “The sustained growth in the eurozone’s manufacturing sector shown by the PMI Index in November masks the severe difficulties manufacturers are currently facing. Indeed, while demand remains high, as evidenced by the further sustained rise in new orders, supply chain disruptions have intensified at an alarming rate. Hindered by input shortages, the average growth rate of production for the fourth quarter as a whole is currently at its lowest level in a year and a half. ”
At the same time, he adds, “the upsurge in the Covid-19 epidemic darkens the outlook for short-term activity, risking indeed reinforcing disruptions in supply chains and causing further displacement. spending from consumer services to consumer goods, thus exacerbating the imbalance between supply and demand. “
At midday on the forex market, the Euro was trading against 1,1330$ about.
KEY GRAPHIC ELEMENTS
The seller’s current was strongly reinforced by the break of a technical zone at 1.1530, on marubozu November 10. This is a major fact, which resulted in a massive release of selling energy. The short term is aligned with the medium term, bearish, on the Euro / Dollar currency pair, but the entry point is no longer optimal, as the probabilities of the formation of a protest rebound increase at this stage. Forex traders will temporarily prefer to stay out of the spot pending an adequate entry point.
MEDIUM-TERM FORECAST
In view of the key graphical factors that we have mentioned, our opinion is neutral in the medium term on the pair Euro Dollar (EURUSD).
We will keep this opinion neutral as long as the price of the pair Euro Dollar (EURUSD) is positioned between the support at 1.1150 USD and the resistance at 1.1360 USD.
DAILY DATA CHART
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Source: Tradingsat
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