(News Bulletin 247) – Powell, at a press conference following the meeting of the Monetary Policy Committee, only confirmed the current market psychology, which is very favorable to the Dollar. Admittedly, the President did not give any clear indications concerning the timetable for raising rates, but adopted a tone that leaves no doubt about his determination to be firm, particularly with regard to the dynamics of prices and the tensions on the job market. In the end, a scenario, which seemed “extreme” even a few weeks ago, of five Fed Funds hikes over the year, with a “double blow” why not as early as March, does not is not totally excluded from the universe of possibilities.
At the same time, the overall loss of risk appetite in the financial markets, in particular due to heightened geopolitical tensions between Russia and Ukraine, weighed on the single currency. Remember that the European Union is largely dependent on Russia for its gas supply. The sanctions scenario in the form of a reduction in European purchases of Russian gas would have major consequences for the Russian economy, but could be a source of additional spikes, at the worst time, in energy prices.
In terms of statistics on Wednesday, very little to get your teeth into except for a slightly stronger than expected widening of the monthly trade deficit in the United States for the month of December. To follow on the agenda this Thursday, as a priority, the very first estimates of annual GDP in the United States at 2:30 p.m., as well as orders for durable goods and weekly registrations for unemployment benefits, still across the Atlantic, at the same time.
At midday on the foreign exchange market, the Euro was trading against around $1.1195.
KEY GRAPHIC ELEMENTS
We warned in our previous analyzes on the flagship currency pair against the “risk” of a false exit from above, an elongated wedge pattern. We are there, and the expression of this false exit abruptly brought the spot back against a 100-day moving average (in orange) with a sharp bearish bias. Traders will be able to gradually resume short positions on the EURUSD spot by taking advantage of a much better quality entry point.
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).
Our entry point is at 1.1192 USD. The price target of our bearish scenario is at 1.1001 USD. To preserve the capital invested, we advise you to position a protective stop at 1.1261 USD.
The expected return of this Forex strategy is 191 pips and the risk of loss is 69 pips.
CHART IN DAILY DATA
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Source: Tradingsat
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