(News Bulletin 247) – The underlying bearish bias remained unchanged on the Euro / Dollar currency pair at the start of the week, after recent publications (U-Mich, NFP, CPI) across the Atlantic, which, combined, clearly militated for the scenario of an uninterrupted continuation of a bellicose monetary policy on the part of the Federal Reserve (Fed). What further increase the potential difference in “remuneration” between the two currencies of the spot, the Euro remaining for its part, as an asset “at risk”, under the pressure of a scenario of entry into recession of the main economic poles of the Monetary Union. The Sentix index of investor confidence coldly illustrated this last week, coming out at its lowest since May 2020…
To follow in priority on the statistical agenda this Monday, the manufacturing index of the NY Fed (Empire State Index) at 2:30 p.m. Friday in the statistics department, operators took note of retail sales across the Atlantic, up 0.1%, beyond the consensus, on a monthly basis. The consumer confidence index (U-Mich, preliminary data), regained a few points to 59.8, slightly exceeding the consensus.
According to strategists at Pictet Wealth Management, “persistent inflation will likely lead to another 75 basis point rate hike at the November 2 FOMC meeting, bringing the average federal funds rate to 3.88%.” […] but then the Fed will broaden its horizons.”
[Elle] may reassess the impact of likely weakening labor market dynamics and deteriorating market liquidity – so a pause in rate hikes in December is possible if economic data deteriorates sharply while conditions financial tightening further.”
However, preliminary data from the consumer confidence index (University of Michigan) came out on Friday at a firmer level than expected, despite their rise in inflation expectations. Hence a market sentiment that is not very favorable to risky assets, against a backdrop of fear of entering an American economic scenario of “overheating”.
At midday on the foreign exchange market, the Euro was trading against $0.9750 about.
KEY GRAPHIC ELEMENTS
We are resuming our bearish work on the Euro/Dollar currency pair, with an adequate 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 0.9753 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 0.9891 USD.
The expected return of this Forex strategy is 352 pips and the risk of loss is 138 pips.
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.
