(News Bulletin 247) – Marked lull in the Euro/Dollar currency pair, before tomorrow’s long-awaited publication of consumer price indices in the United States, the statistical high point of the week. As a reminder, the currency pair will have benefited last week from a slightly more hawkish from Christine Lagarde, with a final gain of more than 300 pips over the week as a whole, gains largely made after the ECB Governing Council.
“In the future, the main challenge for the ECB will be to properly balance the tightening of financial conditions without harming the economy too much”, for César Perez Ruiz Head of investments and CIO at Pictet Wealth Management, who anticipates “now two increases interest rates from the ECB by 25 bps in 2023.”
For Sébastien Galy, Senior Macro Strategist at Nordea Asset Management, “the ECB maintained the course of its monetary policy during the meeting of February 3, while warning of the risks of an increase in inflation in the short term.”
“She indicated that the next meeting in March would be decisive, as she will then have fully assessed the dynamics of inflation over the medium term. In sum, the ECB still considers that inflation depends mainly on supply constraints and high energy prices, while labor market tensions may not yet be strong enough to support significant inflation, even with a 7% unemployment rate.
On the other side of the Atlantic, the prospect of a “double” hike in March (ie 50 bps) does not hold water. A 25bp hike seems assured in any case, in a context of chronic tensions on the labor market, against a backdrop of persistent inflation. Currency traders will therefore be following very closely tomorrow’s publication of the various CPIs (consumer price indices).
“A higher-than-expected reading could lead to further market jolts, as it could imply an even faster tightening of US monetary policy, especially after last week’s NFPs came out sharply accelerating,” warns Vincent Boy. (GI France).
In the immediate future, on the statistical side, there is little to eat on Tuesday. The NFIB Small Business Index barely strayed from target at 97.1. As for the monthly deficit of the US trade balance (December), it came out at -80.7 billion dollars, slightly beating the consensus. This Wednesday, to follow as a priority, across the Atlantic, wholesaler stocks at 4:00 p.m. and crude stocks at 4:30 p.m. Already published, the German trade surplus for the month of December missed expectations (+6.8 billion euros), against +10.9 billion euros in November.
At midday on the foreign exchange market, the Euro was trading against $1.1440 about.
KEY GRAPHIC ELEMENTS
For the first time since June 16 (then on sudden rupture), the spot rubbed shoulders with its 100-day moving average (in orange), the underlying trend line is 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 1.1460 USD.
CHART IN DAILY DATA
©2022 News Bulletin 247
I am currently a news writer for News Bulletin247 where I mostly cover sports news. I have always been interested in writing and it is something I am very passionate about. In my spare time, I enjoy reading and spending time with my family and friends.
