(News Bulletin 247) – Forex traders will have ticked this week for a long time on their calendar, a week which concentrates major monetary meetings, and in particular a Council of Governors of the ECB on Thursday, and the outcome the day before the last FOMC of the year for the Fed, expected at the turn after the confirmation of inflation which is no longer transitory, according to its President J. Powell. Exactly Friday, forex traders were able to take note of consumer prices, the monthly rate of increase of which remains firm.
In the broadest product base, prices increased more than expected in November (+ 0.8% on a monthly basis), against + 0.9% in September. In data corrected for volatile elements (food and energy), prices rose 0.5%, in line with expectations, according to the latest data from the US Bureau of Labor Statistics. What feed the thinking of the Fed, without putting additional pressure.
The stake this week will be to refine the calendar of monetary tightening of the two big institutions on both sides of the Atlantic, to deduce as finely as possible the relative trajectory of the “remuneration” of the two flagship currencies.
On the Fed, “the question of the number of rate hikes is at the heart of the debates. [Les opérateurs ] “now foresee three rate hikes next year, while maintaining those anticipated for 2023. The possible change in the Fed’s monetary policy trajectory has triggered a sharp increase in market volatility”, for Mabrouk Chetouane, director Research and Strategy of BFT Investment Managers. However, this number of expected increases may change rapidly.
“The ECB should wait patiently to reduce its asset buybacks, before starting discussions on rate hikes.” for Vincent Boy (IG France).
Apart from these purely monetary considerations, forex traders will continue to monitor, due to its impact on risky assets of the economic situation in China, particularly on the real estate front. Mr. Boy specifies: “The latest economic data from China showed a slowdown in the economic rebound, impacted by the health crisis, shortages, or even risks related to the real estate sector. We will also monitor industrial production and retail sales Wednesday. “
No major meeting to follow for the rest of the day. Note the encouraging contraction of the Italian unemployment rate, which fell from 9.8% to 9.2% of the working population.
At midday on the forex market, the Euro was trading against 1,1271$.
KEY GRAPHIC ELEMENTS
The short current was strongly reinforced by the break of a technical zone at 1.1530, on marubozu on November 10th. This is a major fact, which resulted in a massive release of selling energy. The short term is aligned with the medium term, bearish, on the Euro / Dollar currency pair, but the entry point is no longer optimal, as the probabilities of the formation of a protest rebound increase at this stage. Forex traders will temporarily prefer to stay out of the spot while waiting for a suitable entry point. A break from the low points of November would give a signal.
A break that would mark the end of a straitjacket lateralization, and which can be triggered by monetary announcements this week, or at least by inflections in the elements of language used by the big cashiers.
MEDIUM-TERM FORECAST
In view of the key graphical factors that we have mentioned, our opinion is neutral in the medium term on the pair Euro Dollar (EURUSD).
We will keep this neutral opinion as long as the price of the pair Euro Dollar (EURUSD) is positioned between the support at 1.1150 USD and the resistance at 1.1360 USD.
DAILY DATA CHART
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Source: Tradingsat
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