(News Bulletin 247) – The single currency tumbled sharply against the dollar as confirmations of a continuation of a very offensive monetary policy on the part of the Fed took shape.
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, 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.
On the European side, the latest indicators of confidence in the economy and of investor confidence have finally started to rise again. “In the euro zone, the November ZEW survey surprised significantly on the upside this week, in line with the rebound already observed in the Sentix survey”, note the strategists of Nomura. “Is the peak of pessimism behind us? [Cela] could be the case for future expectations, partly because of all the fiscal measures announced by various eurozone countries; however, we expect the components of current conditions to continue to decline as the impending recession takes hold. Even the ECB has increasingly recognized that a recession is likely, assigning it an 80% probability.”
The week will be rich in statistical terms, with in particular at its heart, Wednesday, the first estimates of activity indicators (PMI), for services and industry. The industrial component for Germany is expected at 45.3 for the current month.
At midday on the foreign exchange market, the Euro was trading against $1.0230 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 1.0239 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 1.0335 USD.
The expected return of this Forex strategy is 238 pips and the risk of loss is 96 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.
