(News Bulletin 247) – The European Central Bank (ECB) is completing a new Board of Governors on Thursday, which should result in a further increase in key rates, this time by 75 bps to bring them to 1.25%. A turn of the screw that the foreign exchange market has already largely integrated, and which responds to the need to control galloping inflation, even if it means slowing down economic activity, at the very time when Moscow acts the use of its gas exports as a political weapon .
“The main objective of the ECB will be to concentrate the monetary tightening, whatever its consequence” summarizes Frédérik Ducrozet (Pictet WM), who thinks that “the ECB will interrupt its process of raising rates in a context of recession which is worsens by the day, although policy normalization may resume later in 2023.”
Verdict at 2.15 p.m. for the monetary policy decision itself and at 2.30 p.m. for the speech by Mrs. Lagarde, President of the powerful Frankfurt Monetary Institution.
“It is difficult to imagine anything other than a “hawkish” speech by Christine Lagarde during the press conference which will follow the decision on the rates”, abounds Alexandre Baradez (IG France), for whom “the sound of the bell is the even on both sides of the Atlantic: you have to hit hard and in the short term, even if you have to go through a recession, because otherwise the long-term costs for the economy would be far too high.”
In the macroeconomic chapter, the slowdown in the growth of Chinese exports, against a backdrop of contraction in global demand and the Zero Covid policy in several megacities, further weighed down the atmosphere. Yesterday, the revision of growth in Q2 in the Euro Zone, to +0.8% quarterly, however, allowed the single currency to control its hemorrhage.
At midday on the foreign exchange market, the Euro was trading against $1 about.
KEY GRAPHIC ELEMENTS
For the time being, the return to contact with a zone close to perfect parity reinforces the idea of ​​a short-term lateralization between $0.9900 and $1.0090. More this phase of tidy will bring the spot of its 50-day moving average (in orange, powerfully bearish), the more the bearish entry point will gain in quality.
MEDIUM TERM 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 keep this neutral opinion as long as the Euro Dollar (EURUSD) parity prices are positioned between the support at 0.9900 USD and the resistance at 1.0000 USD.
CHART IN DAILY DATA
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