(News Bulletin 247) – While “the ECB is slowly getting in tune with a less accommodating market” in the words of Sébastien Galy, Senior Macro Strategist at Nordea AM, the Fed has already largely prepared the markets for several rate hikes federal this year. At least 4, of which may be a “double” (ie +50 bps) from the March maturity. However, this option very much depends on the annual inflation figures which will be published at 2:30 p.m. (Paris time). This essential working basis for the Fed in the more or less aggressive construction of its monetary policy is THE major event for forex traders this Thursday.
“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.” Boy (IG France). Hence a feverish expectation situation on the currency pair, above $1.14.
Remember that 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.”
On the statistical side yesterday, the monthly trade surplus of the German trade balance for the month of December, at +6.8 billion euros, completely missed expectations.
At midday on the foreign exchange market, the Euro was trading against $1.1430 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 1.1460 USD.
CHART IN DAILY DATA
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