(News Bulletin 247) – Marked lull in the Euro/Dollar currency pair, ahead of Thursday’s long-awaited publication of consumer price indices in the United States. As a reminder, the currency pair will have benefited last week from a slightly more hawkish tone on the part of Christine Lagarde, with in the end a gain of more than 300 pips over the whole week, gains largely made at the outcome of the Governing Council of the ECB.
Under pressure after the publication, on Wednesday, of an unprecedented surge in inflation in the euro zone (+5.1% over one year in December, + 2.3% corrected for the corrected prices of energy, alcohol and tobacco), Christine Lagarde acknowledged that the rise in consumer prices was stronger than expected, also admitting that the risks were on the upside, while repeating that she was counting on a slowdown in here the end of the year. The ECB President also assured that the institution’s Governing Council would not take a hasty decision on monetary policy but did not reaffirm that a rate hike this year was “very unlikely”, as she had said at the last meeting.
“The ECB has taken a further step by estimating that inflation was higher than expected and that it could remain so for longer than expected, at least for several months”, for Vincent Manuel, Chief Investment Officer at Indosuez Wealth Management . “What has also changed”, he continues, “is the perception of the labor market, which should at some point generate upward pressure on the level of inflation, but to a lesser extent than ‘in the United States or the United Kingdom. With a record unemployment rate of 7% and a participation rate back to pre-pandemic levels, the labor market is perceived to be very strong and could lead to upward pressure on wages, which the ECB does not yet see. This can be interpreted as a critical point that will have an impact on ECB policy in the future.”
In terms of statistics yesterday, the Sentix index of investor confidence in the Euro Zone rose more than expected, to 16.6 points.
To follow the American trade balance at 2:30 p.m. A little earlier at 12:00 p.m. the NFIB indicator of US small businesses will be released. Note that the French trade balance deficit for the month of December missed the target, widening further to -11.30 billion euros.
At midday on the foreign exchange market, the Euro was trading against $1,1400 about.
KEY GRAPHIC ELEMENTS
For the first time since June 16 (then on sudden break), the spot was close to its 100-day moving average (in orange), the underlying trend line still very significantly bearish. Traders will continue to adopt a posture of patience, awaiting a satisfactory entry point, as the consolidation that began at the end of November takes on a very broad form.
MEDIUM TERM FORECAST
In view of the key graphic factors that we have mentioned, our opinion is neutral in the medium term on the Euro Dollar (EURUSD).
We will maintain this neutral opinion as long as the Euro Dollar (EURUSD) parity prices are positioned between the support at 1.1360 USD and the resistance at 1.1530 USD.
CHART IN DAILY DATA
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