(News Bulletin 247) – The Dollar should continue to appreciate as the US central bank is much more aggressive than the European central bank in fighting inflation. It is true that the economies of the two continents are not comparable and that the prospect of a recession in the United States is not really scary because it could be short-lived. Moreover, “horse remedies” are not the least effective. In Europe, there is an additional difficulty, that of managing significant rate differences. Moreover, a recession could prove to be really problematic.
Clearly, there are many arguments in favor of a deeper depreciation of the European currency. However, parity has proven to be an unavoidable psychological factor strong enough to thwart rational economic explanations. Holding this state of affairs and as long as it lasts, we must avoid, in our view, staying in the seller’s camp but not buying recklessly either. The FED begins its meeting today. An increase of 0.75% is expected or even announced. It goes without saying that if the rise is 1%, the parity would certainly be broken.
In the immediate future, traders are looking to move away from parity and at the end of the morning on the foreign exchange market, the Euro was trading against the Dollar at around $1.0207.
KEY GRAPHIC ELEMENTS
Between potential “remuneration” lower than expected, and risk of recession, particularly with regard to the weight of German industry, the Euro has seen its rebound, operated since the achievement of perfect parity, dry up. Entering a rebalancing phase, not without volatility, is the chosen option. Neutral opinion issued, avoiding taking positions immediately, still awaiting the outcome of the FED meeting.
FORECAST
In view of the key graphic factors that we have mentioned, our opinion is neutral in the medium term on the Euro Dollar (EURUSD). We will maintain this neutral opinion as long as the prices of the Euro Dollar (EURUSD) parity are positioned between the support at 1.0000 USD and the resistance at 1.0274 USD
CHART IN DAILY DATA
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