(News Bulletin 247) – While the yield on 10-year US government bonds passed the symbolic 4% mark – a first since 2008 – the Euro continued to fall against the Dollar, the greenback benefiting from a double favorable effect: that of its character as a safe haven, which is fully expressed as the risks of entry into recession in the United States and the Euro Zone increase, and that of its increase in “remuneration” against the single currency , whose “at-risk” currency character is penalizing.
Since their last meeting, several Fed officials, such as the president of the Saint-Louis branch James Bullard, have insisted on the need to continue raising the key rate, even if it means causing a recession. Analysts now see the key rate peaking at around 4.5% in the coming months.
“Apart from an improbable reversal, in the short term, on the geopolitical scene, the macroeconomic context should remain quite degraded with central banks which will not weaken in their monetary tightening, despite the growing risks of a hard landing in growth”, analyzes Thomas Giudici, co-head of bond management at AURIS Gestion.
On the macroeconomic side, there was little to eat yesterday, while waiting for US PCE prices and GDP in final data for the second quarter, in the last part of the week. Note the publication, beyond expectations, at 108, of the consumer confidence index (Conference Board). To follow as a priority this Wednesday, across the Atlantic, the trade balance of goods at 2:30 p.m., housing sales in progress at 4:00 p.m., and crude stocks at 4:30 p.m.
At midday on the foreign exchange market, the Euro was trading against $0.9550 about.
KEY GRAPHIC ELEMENTS
While volatility has exploded since the last passage below parity, it is precisely the moment of reason to keep and avoid getting carried away by the temptation to reinforce its bearish positions on the currency pair, which can trigger any time the counterintuitive formation of a challenging move, heading towards its remarkable 20-day moving averages (in dark blue) at first.
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 0.9581 USD. The price target of our bullish scenario is at 0.9889 USD. To preserve the capital invested, we advise you to position a protective stop at 0.9499 USD.
The expected return of this Forex strategy is 308 pips and the risk of loss is 82 pips.
CHART IN DAILY DATA
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