(News Bulletin 247) – A very important point first of all, as two major monetary meetings approach. If the forex trading community expects the ECB to be “harder” than the Fed, it will take a more offensive tone than expected from C Lagarde, AND a more “soft” tone than expected from J Powell to further catalyze, at this stage, the Euro’s catch-up against the Dollar.
The Fed completes its FOMC on Wednesday 01 February and the ECB its Board of Governors on Thursday 02 February.
“The Fed is expected to raise rates by 25bp. This hike would be lower than the 50bp and 75bp hikes adopted in December and November respectively, which reflects the recent slowdown in inflation” act César Perez Ruiz, Head of Investments and CIO at Pictet Wealth Management. “But the Fed’s lingering concerns about the tightness of the labor market could prompt it to continue to tighten policy until May before pausing (not cutting interest rates).
Precisely on employment, operators will have valuable benchmarks this week (new JOLTS offers, ADP survey, weekly jobless claims and the high point on Friday, the federal report on private employment). Any sign of persistent and chronic tension in employment will be grounds for anticipating continued tension in the monetary cord. And can, if necessary, push back the pivot date estimates.
On the ECB, whose verdict is expected on Thursday, in a market note cleverly titled “ECB shows who’s the boss of the market”, Nomura strategists argue that a 50 basis point hike is almost a given. While the latest European statistical releases, in particular the German PMI and IFO, have brought relief, “the ECB will likely use this positive outlook on activity as justification to continue to tighten its policy aggressively in the short term. term, and to raise concerns about the resilience of growth that could lead to even more persistent underlying inflation,” the Japanese bank’s strategists continued.
To be monitored on the statistical side today, the S&P / CS real estate price index at 3:00 p.m., the CHicago PMI index at 3:45 p.m., and the consumer confidence index (Conference Board) at 4:00 p.m. In the immediate future, growth in the Euro Zone for the year 2022, in preliminary data, has just shown an increase of 3.5%, exceeding expectations thanks to a surprise increase in GDP in Q4.
At midday on the foreign exchange market, the Euro was trading against $1.0825 around.
KEY GRAPHIC ELEMENTS
the trends bullishness of the Euro currency pair is now well established. We are in a situation where the oscillatory RSI is flirting with its “overbought” limit without ever crossing it. The advice will remain positive as long as the closing data for each daily candle is above the 20-day moving average (dark blue), which has been in positive direction since the marubozu white of November 04.
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 1.0824 USD. The price target of our bullish scenario is at 1.1459 USD. To preserve the invested capital, we advise you to position a protective stop at 1.0644 USD.
The expected return of this Forex strategy is 635 pips and the risk of loss is 180 pips.
CHART IN DAILY DATA
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