(News Bulletin 247) – Forex traders continued to deal with the resolutely firm tone of the major central banks on both sides of the Atlantic, which met their respective monetary policy committee last week.
“The FED, but also the ECB and the Bank of England clearly reminded investors of reality during their monetary policy meeting held last week”, observes Sébastien GRASSET (Auris Gestion): “if the pace and scale increases in key rates will be, as expected, less (50 bps increase for the three central banks at their last meeting instead of the previous 75 bps), the fight against inflation is far from over and key rates will continue to rise with certainly staying at a high level for a longer time than bought by the market.”
A message hawkishwhich put investors “in their place”, for M Boy (IG France), and which caused the market to revise the shape of the rate increase curve, and the estimate of terminal rates.
“The message from central banks on both sides of the Atlantic is clear at the end of the year. It is to say to the financial markets: “Do not be too optimistic and do not consider that our monetary policy is essentially guided by the consumer price index”. In other words, it is certainly the employment indicators that will further guide central bankers in order to measure the latitude in their monetary tightening action”, continues Mr. GRASSET.
However, the signals on employment, in particular on the other side of the Atlantic, augur a continuation of the tensions. The level of weekly registrations for unemployment benefits in particular, in the immediate vicinity of 200,000 new units on a chronic basis, militates in this direction.
Yesterday the single currency benefited the IFO index of the business climate in Germany, up to 88.6, beyond expectations, while the Dollar suffered from the publication of PMI, in 1st estimates for the month of December, missing completely expectations.
To be followed in priority on the macroeconomic agenda this Tuesday, housing starts and building permits in the United States at 2:30 p.m., and the consumer confidence index in the Euro Zone at 4:00 p.m.
At midday on the foreign exchange market, the Euro was trading against $1.0600 around.
KEY GRAPHIC ELEMENTS
The 20-day moving average (in dark blue) continues to play its role of chart support. Positive opinion kept above this trendline whose orientation is straight.
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 1.0597 USD. The price target of our bullish scenario is at 1.1189 USD. To preserve the capital invested, we advise you to position a protective stop at 1.0434 USD.
The expected return of this Forex strategy is 592 pips and the risk of loss is 163 pips.
CHART IN DAILY DATA
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