(News Bulletin 247) – The Euro continued to chart a downward-biased consolidation (started on November 14), nervously awaiting forthcoming clear signals on the Fed’s and ECB’s intentions for the coming months. The Fed will precisely publish its Minutes tomorrow. A traditional report of the last monetary policy meeting (FOMC), before the operators meet up with their families for the long Thanksgiving truce. It will naturally be a question, in these Minutesthe appreciation and interpretation of the latest consumer price indices on the other side of the Atlantic, finally showing a slowdown in the dynamics of rising prices.
But “if the inflation figures in the United States have been rather positive, the fight towards the 2% target is not yet completely won”, warns Thomas GIUDICI, Head of bond management at AURIS Gestion. “The members of the FOMC are also there to remind us (hoping that they do not have the same foresight as Cassandre), which makes it possible to “recalibrate” the expectations of investors who are sometimes a little too optimistic.”
While the slowdown in the progression of US CPIs had augured, two weeks ago, a relative easing of the Fed’s monetary policy, the signs of a continuation of the tightening have indeed multiplied thereafter. James Bullard, the chairman of the St. Louis branch of the US Federal Reserve, known for his “hawkish” positions, said rates should move above 5% to curb inflation. It is the same observation that was drawn up by Christine Lagarde. The President of the European Central Bank insisted on Friday on the continuation of interest rate hikes to calm the rise in prices.
Tomorrow the calendar will be significantly expanded with, in addition to the Minutes mentioned, the PMI activity barometer indicators in 1st estimates for the current month.
To follow as a priority on the statistical agenda this Tuesday, the manufacturing index of the Richmond Fed at 4:00 p.m.
At midday on the foreign exchange market, the Euro was trading against $1.0290 about.
KEY GRAPHIC ELEMENTS
The very significant high wick on Tuesday 15/11 heralded the start of a consolidation phase that is taking a corrective turn, heading towards the 20-day moving average (in dark blue). Below this, the return to a level of perfect parity ($1/€).
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 1.0284 USD. The price target of our bearish scenario is at 1.0001 USD. To preserve the invested capital, we advise you to position a protective stop at 1.0362 USD.
The expected return of this Forex strategy is 283 pips and the risk of loss is 78 pips.
CHART IN DAILY DATA
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