(News Bulletin 247) – Between hopes of a slowdown in the rate of rise in Fed Funds and divergent macroeconomic publications, the Dollar stabilized in its downward movement against a Euro which, for its part, will have benefited from a relaxation of anti-Covid measures in China. The main fixture for forex traders on Friday was the federal NFP jobs report, which showed recurring tensions.
In detail, while the unemployment rate stood at a stable level, at 3.7% of the active population, the number of job creations in the private sector (excluding agriculture) remained high, at 263,000 new units, well above target; and above all, the dynamics of wages (+0.6% on a monthly basis) shows no signs of easing.
Figures that immediately followed the publication, the day before inflation (PCE) confirming a slowdown in price increases.
On the European monetary policy side, the single currency remains supported this morning by rather hawkish comments from Gabriel Makhlouf, Governor of the Central Bank of Ireland and member of the Governing Council of the ECB. The main leaders of the ECB are taking part in an event organized by the Regional Institute of the IMF of Singapore and the central banks of Southeast Asia, in Cambodia on Monday.
No surprise regarding the services PMI in final data in the Euro Zone for the month of November, which deviates very little from the preliminary data, at 48.5 points. On the other hand, there was a good rise in the Sentix index of investor confidence in the Euro Zone, at -21.0.
Manfred Hübner, Director of the Sentix Institute, a specialist in behavioral finance, provided the following additional insights: “The latest sentix economic data is again surprisingly improving. Investors are spreading hope that thanks to a mild winter , sufficient gas storage and a possible spike in inflation, the economic slowdown has also passed its zenith.Internationally, there is also a more subdued tone from the US Federal Reserve, which suggests the prospect of “just” a 50 basis point interest rate hike in December. And in China, protests appear to be finally accelerating the end of restrictive anti-Covid measures. Will the recession end before it really started?”
At midday on the foreign exchange market, the Euro was trading against $1.0550 about.
KEY GRAPHIC ELEMENTS
Volatility remains high on the spot which traces a broad consolidation, whose structure remains to be defined, around $1.0300. 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. The flag terminals are clearly marked, between 1.0240 and $1.05. The eventual formation of a diamond figure is not excluded.
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 1.0557 USD. The price target of our bearish scenario is at 1.0101 USD. To preserve the capital invested, we advise you to position a protective stop at 1.0676 USD.
The expected return of this Forex strategy is 456 pips and the risk of loss is 119 pips.
CHART IN DAILY DATA
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