(News Bulletin 247) – The Euro/Dollar currency pair was frozen as the long-awaited publication of the Fed Minutes approached tonight at 8:00 p.m. (Paris time). A report of the latest FOMC which will take on a very particular color after the publication on Friday of a particularly (too?) robust NFP employment report, and on the eve of the publication of consumer price indices across the Atlantic for the month of october…
“Overall, there are signs that the U.S. economy is slowing, although the labor market remains robust, particularly in the service sector. This may not be ‘bad news’ enough for encourage the Federal Reserve (Fed) to pause its interest rate hike cycle, but perhaps enough to slow it down.The case for a slowdown is much clearer for the Eurozone, where a significant contraction activity is already in place,” said Warren Hylan, Emerging Markets Portfolio Manager at Muzinich.
As a reminder on Monday, the growing risks of seeing the main economic centers in the Euro Zone go through recession have penalized risk appetite, especially with the publication of a Sentix index of investor confidence at its lowest since May 2020… The barometer-value indicator sank to -38.3, missing yet pessimistic expectations, at the lowest since May 2020. “The continuing uncertainties on the gas and energy situation in winter have not diminished due to the attack on the Nordstream pipelines. In addition to economic worries, there is now also a growing likelihood of an escalation of the military conflict in Ukraine. Overall, there is little reason to “hope”, could we read on the cold and laconic commentary accompanying the publication of the firm specializing in behavioral finance…
The Japanese bank Nomura agrees, for which “there is little room for a respite to come”, and which remains pessimistic about the dynamics of the index, materializing a reminder of a scenario of “imminent recession”. Despite the continued deterioration in sentiment, Nomura maintains its view on the ECB. “Recent comments from members of the ECB Governing Council clearly show that they are focused on bringing inflation down to target. This confirms our view that the ECB will hike by 75 basis points at each of the next two meetings (in October and December), followed by a 25 basis point hike in February 2023.”
To follow this Wednesday, the producer price index in the United States at 2:30 p.m. and the Fed Minutes at 8:00 p.m.
At midday on the foreign exchange market, the Euro was trading against $0.9700 about.
KEY GRAPHIC ELEMENTS
We resume our bearish work on the Euro/Dollar currency pair, with a suitable entry point, following pullback on parity AND 50-day moving average. With the advantage of having a clearly defined stop loss level, which mechanically increases the quality of the money management associated with the operation.
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 0.9703 USD. The price target of our bearish scenario is at 0.9401 USD. To preserve the invested capital, we advise you to position a protective stop at 0.9805 USD.
The expected return of this Forex strategy is 302 pips and the risk of loss is 102 pips.
CHART IN DAILY DATA
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