EUR / USD: The ECB does not face the same problems

(News Bulletin 247) – The Fed has paved the way for monetary normalization, by paving the way a little more clearly. It plans to end the bond buyback program in March, and a three-quarter point increase in its rates, in three times, over the coming year.. And this with the aim of fighting against inflation that is no longer temporary. Associated with the new economic projections, this strategic commitment of the Fed was not considered more “hawkish” than expected. It must be said that this turn (not too tight) was anticipated. “Several former Fed members, such as William Dudley, Dennis Lockhart and more recently Narayana Kocherlakota, have published columns calling on the Fed to quickly tighten its monetary policy to bring inflation back on a more acceptable path,” noted Alexandre Baradez (IG France) before the outcome of the FOMC.

Finally, “a decision quite in line with expectations” for Ronan Blanc, Managing Analyst at Financière Arbevel. “The Fed is trying to become an actor in its monetary policy again with some success (admittedly half-forgiven fault?). And fortunately for it, the cyclical peak of inflation seems close. The longer-term question is to know at what level she could land past that peak. That’s probably where she’ll be expected. So far she’s saving time and doing it pretty well. ” A “courageous” decision, for John Plassard, (Mirabaud), for whom the Fed “finally tackles rising inflation before it gets potentially out of control. Investors welcomed this decision by betting that the Fed will not find itself “behind the curve” by adopting a much more tone. hawkish (hawk) and planning 3 rate hikes in 2022.

Falcon certainly, but little more than the trading rooms anticipated. For the currency pair that interests us here, it is the relative attitude of the ECB that will potentially be the catalyst. The European Central Bank is completing a Board of Governors today. But on this side of the Atlantic, “the situation is very different with a Euro Zone which experiences less inflation and a less tense job market than on the other side of the Atlantic”, notes the Capital Markets Strategies team. at Tikehau Capital. “The ECB is eagerly awaiting the continuation of the PEPP (Pandemic Emergency Purchase Program) which is due to expire in March 2022. To avoid a too pronounced march with the APP program (Asset Purchase Program or asset purchase program) with less criteria flexible and not allowing the purchase of Greek government securities, a new sequence will be announced. It will have to convince that it addresses the fears of stakeholders on a possible financial fragmentation between the so-called “core” countries and the peripheral zone. “

Verdict at 1:45 p.m. for the monetary policy decision and at 2:30 p.m. for the press conference by Ms. Lagarde and Mr. de Guindos.

In the immediate future, little surprise on the publication of PMI activity indicators in services and industry, the first estimates for the current month. On the other hand, there is a huge gap to be noted concerning the trade surplus in the Euro Zone for the month of October. EuroStat the figure at 2.4 billion euros, against a target of 5.7 billion and a month of September at +6.1, in data adjusted for seasonal effects (seasonally adjusted data).

To follow the manufacturing index Empire State and weekly registrations for unemployment benefits at 2:30 p.m. The US Industry Report (Production Volume and Capacity Utilization Rate) will be released at 3:15 pm.

At midday on the forex market, the Euro was trading against 1,1310$ about.

KEY GRAPHIC ELEMENTS

The seller’s current was strongly reinforced by the break of a technical zone at 1.1530, on marubozu November 10. 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 which 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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