(News Bulletin 247) – This article, in free access, is produced by the stock market analysis and strategy research team of News Bulletin 247. To not miss any opportunity, consult all the analyzes and discover our portfolios by accessing our Privileges area.
Even as forex traders are just beginning to digest the estimated impact of the SVB bankruptcy on the upward trajectory of Fed Funds, revised drastically downwards, they must quickly turn to the ECB, which will complete a new Board of Governors tomorrow . With a burning question, posed in these terms by Alexandre Neuvy, Director of Private Wealth at Amplegest: “Will bank failures in the United States impact the upward momentum of ECB interest rates?”
“The ECB will probably increase its base rate by 50 points at this meeting in line with expectations. Beyond this decision, it is above all Ms. Lagarde’s speech that will arouse interest on the future path of interest rates” , answers the strategist in a clear cut way.
Since the second half of last week, the narrowing of the “reward” differential to come between the spot currencies has played in favor of the Euro, which has achieved a chart rejection up to its 50-day moving average (in orange ). But the single currency’s reputation as a risky asset could quickly take over as equity markets on both sides of the Atlantic correct.
“In the coming months, expect a great battle between the ‘hawks’ and the ‘doves’, i.e. between the supporters of a hard line and those who demand more flexibility in politics. monetary,” says a strategist.
To follow in priority on the macroeconomic agenda this Tuesday on the American side the indices of producer prices, the Empire State index and retail sales at 1:30 p.m. Note that the ECB will complete its Board of Governors tomorrow. A 50 basis point hike is expected, barring a huge surprise. The content of the debates between hawkish and dovish (respectively militant for a restrictive, firm, and more accommodating and measured policy), will be scrutinized.
At midday on the foreign exchange market, the Euro was trading against $1.0670 approximately.
KEY GRAPHIC ELEMENTS
It’s a pullback very clear that emerges on the currency pair Euro / Dollar, with the formation (still to be validated) of a significant upper shadow at the level of the moving average at 50 days (in orange), which is inflected downwards. A hanging candle would endorse the scenario. For now, the doji flanked by candles with respective green and red bodies delivers a corrective message.
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 1.0665 USD. The price target of our bearish scenario is at 1.0239 USD. To preserve the capital invested, we advise you to position a protective stop at 1.0766 USD.
The expected return of this Forex strategy is 426 pips and the risk of loss is 101 pips.
The News Bulletin 247 board
CHART IN DAILY DATA
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.
