(News Bulletin 247) – In a context of weakening risk appetite after the Jackson Hole conference, the Euro remained under strong pressure against the safe haven Dollar, around perfect parity.
The fight against inflation in the United States “will make American households and businesses suffer, but giving it up would be even more damaging for the economy, warned Friday the head of the American Central Bank (Fed), Jerôme Powell. Returning to price stability “will take time” and will lead to “a long period of weaker growth” as well as “a slowdown in the labor market”, hammered the Chairman of the Fed, from the idyllic valley of Wyoming. The central banker also warned that the fight against inflation would “suffer American households and businesses”. The Fed wants to bring price inflation back to around 2%, and this policy will have “a series of ‘unfortunate costs'”, he also argued.
As a reminder, operators were also able to refine the ECB’s rate hike projections for the next Board of Governors, with the latest report from the last edition. The probabilities of seeing an acceleration in the rise in rates, namely the scenario of +75bps in September, are taking shape. “The ECB has no choice but to engage in faster monetary tightening as long as inflation continues to rise,” warns Frederik Ducrozet (Pictet Wealth Management) in a note. “However, policy normalization will be difficult and a ‘stop-and-go’ approach looks increasingly possible. This means that the ECB could pause when the recession hits in early 2023, but resume the recovery rates when the economy recovers later next year.”
The earnings differential between the two currencies remains clearly in favor of the Dollar for the coming months.
“Jackson Hole thus closes the (beautiful) summer parenthesis and plunges us directly into a return to school under the sign of caution”, summarizes Thomas Giudici (Auris Gestion).
To follow as a priority on the statistical agenda this Tuesday, the American consumer confidence index (Conference Board) as well as new job offers across the Atlantic (JOLTS) at 4:00 p.m.
At midday on the foreign exchange market, the Euro was trading against $1 about.
KEY GRAPHIC ELEMENTS
At this stage, the return, frank, in contact with parity, looks like a pullback (graphic rejection). The bottom bias remains powerfully bearish, below a 50-day moving average (in orange) which exerts significant chart weight. In the immediate future, nervous oscillations around the parity are considered.
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 maintain 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 1.0175 USD.
CHART IN DAILY DATA
©2022 News Bulletin 247
I have over 8 years of experience working in the news industry. I have worked as a reporter, editor, and now managing editor at 247 News Agency. I am responsible for the day-to-day operations of the news website and overseeing all of the content that is published. I also write a column for the website, covering mostly market news.
