(News Bulletin 247) – Unchanged market psychology on the Euro/Dollar currency pair, the first component of which continued to suffer from the loss of risk appetite in the financial markets, and the second to benefit from its character as a safe haven , and the prospect of an increase in its yield difference. Precisely on the “rent” side of the Dollar, it is this Wednesday that a new Monetary Policy Committee of the Fed ends. A 75 basis point increase in Fed Funds is fairly largely anticipated, without formally excluding the 100 bp option, which took shape as soon as the publication, last week, of inflation core American for the month of August.
Verdict at 8:00 p.m. (French time) for the rate decision itself, all monetary policy decisions and the new economic forecasts from the Fed. See you at 8:30 p.m. for the traditional press conference.
It is not good to be the greatest central banker on the planet, particularly awaited at the turn in the face of a “very complicated situation”, in the words of Emmanuel Auboyneau, Managing Partner of Amplegest. “Its desire to fight inflation by vigorously raising its rates is indeed leading to a deterioration in the economic outlook. However, defeating the rise in prices while preserving the economy remains a very risky exercise” The manager also warns: “An increase by 75 basis points at the next meeting has already been recorded. And if the FED were to increase by 100 basis points, it would send a strong message likely to scare off some investors.”
On the geopolitical side as well, the situation remains very favorable to the safe haven represented by the greenback. Vladimir Putin mobilized his reserve to fight in Ukraine and said he was ready to use “all means” to defend himself.
To follow as a priority on the statistical agenda this Wednesday, for the United States, sales of old homes at 4:00 p.m., crude stocks at 4:30 p.m., the Fed’s monetary policy decision at 8:00 p.m. and the consecutive press conference, at 8:30 p.m. No sharp macroeconomic figures from the Euro Zone are on the agenda this Wednesday. We will have to wait until Friday to reconnect with such benchmarks, with a battery of PMI activity indicators.
At midday on the foreign exchange market, the Euro was trading against $0.9930 about.
KEY GRAPHIC ELEMENTS
The passage, again, below parity with the Dollar is symbolic. It strengthens the character bearish background bias. Especially since it is following the formation of two consecutive high shadows above the 50-day moving average (in orange), that volatility has increased. This bottom trend line is definitely a dynamic level of resistance that is as reliable as it is valuable. Another bout of volatility to report immediately, with a bigger bet between the spot and parity (one to one). Negative opinion proposed, with this parity level used as a protective stop (stop-loss).
MEDIUM TERM FORECAST
In view of the key graphic factors that we have mentioned, our opinion is negative in the medium term on the Euro Dollar (EURUSD) parity.
Our entry point is at 0.9923 USD. The price target of our bearish scenario is at 0.9701 USD. To preserve the invested capital, we advise you to position a protective stop at 1.0001 USD.
The expected return of this Forex strategy is 222 pips and the risk of loss is 78 pips.
CHART IN DAILY DATA
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