(News Bulletin 247) – A marked slowdown in the pace of inflation, as defined by American CPIs, has just created volatility on the foreign exchange market, weighing on the Dollar, by almost definitively ruling out the hypothesis of an increase, tomorrow, 75 bps of Fed Funds from the Fed, which will complete its last FOMC of the year.
At an annualized rate, the consumer price index (largest basket) increased by 7.1% in November, against 7.7% in October. A sharp slowdown that beats the consensus.
“The Central Bank is meeting for the last time in 2022 and is expected to announce a 50 basis point increase in its key rates, ending the largest annual rate hike in decades”, comments Emmanuel Auboyneau, Managing Partner of Amplegest. , who thinks “that the peak of inflation has passed and that a gradual decline is ahead of us. Jerome Powell will have to hold a balanced speech to show his vigilance on the rise in prices while keeping an eye on an economy for the resilient but fragile moment. Too strong a rhetoric would, on the other hand, be resented by the markets, which are betting on an imminent end to the rate hike cycle.”
See you tomorrow at 8:00 p.m. for the actual monetary policy decision and the Fed’s economic projections, then at 8:30 p.m. for the traditional press conference.
On the European side this morning, the German “ZEW”, although still clearly in negative territory, improved, to -23.3, better than the consensus had suggested.
At midday on the foreign exchange market, the Euro was trading against $1.0640 about.
KEY GRAPHIC ELEMENTS
The publication of a marked slowdown in US inflation is pushing the Dollar back as much as it is supporting the risky asset that is the Euro. In this sense, the anticipation of a diamond congestion pattern does not make more sense, and the 20-day moving average (in dark blue) plays its supporting role.
MEDIUM TERM FORECAST
In view of the key graphic factors that we have mentioned, our opinion is positive in the medium term on the Euro Dollar (EURUSD) parity.
Our entry point is at 1.0646 USD. The price target of our bullish scenario is at 1.0995 USD. To preserve the invested capital, we advise you to position a protective stop at 1.0499 USD.
The expected return of this Forex strategy is 349 pips and the risk of loss is 147 pips.
CHART IN DAILY DATA
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