(News Bulletin 247) – Against a background of shrinking appetite for risk with the clashes in China between exasperated civilians and police, the Euro paradoxically gained a few pips against the dollar, in a market lacking benchmarks from the United States. It must be said that since Thursday, forex traders have only had to eat half a session on Wall Street, moreover very largely deserted. And that the main statistical meeting this week is not expected before tomorrow: it is the index of consumer confidence (Conference Board), expected to contract, at 100 points.
The main problem for currency traders remains that of identifying a neutral rate for the Fed, and the shape of the rising curve for Fed Funds. Probably more flattened, if we are to believe the inflections of elements of language contained in the Minutes of the meeting of November 1 and 02.
As a reminder, the neutral rate is a construction: it is the key rate beyond which the Fed, or any other central bank for that matter, causes a slowdown in activity. Below this, the economy continues to “warm up”. The neutral rate is the one that optimally achieves the Fed’s two main objectives: full employment, and an inflation target of 2%.
On the Euro Zone side, the situation remains fragile, particularly with regard to the pressure of the energy component on inflation. “Commodity prices remain high, the shadow of an energy crisis still hangs over Europe and poses many risks to growth in the euro zone,” warn strategists at Lazard Frères Gestion.
To follow at 3:00 p.m. a speech by Mrs. Lagarde, President of the Fed, at a hearing before the Committee on Monetary and Economic Affairs at the European Parliament.
At midday on the foreign exchange market, the Euro was trading against $1.0470 about.
KEY GRAPHIC ELEMENTS
Volatility remains high on the spot which traces a broad consolidation, whose structure remains to be defined, around $1.03. A continuation of these nervous oscillations is the preferred option, an unattractive graphic scenario for taking positions. We would prefer to stay out of spot immediately.
MEDIUM TERM FORECAST
In view of the key graphic factors that we have mentioned, our opinion is neutral in the medium term on the Euro Dollar (EURUSD).
We will maintain this neutral opinion as long as the Euro Dollar (EURUSD) parity prices are positioned between the support at 1.0175 USD and the resistance at 1.0484 USD.
CHART IN DAILY DATA
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