(News Bulletin 247) – The ultimately not so easy digestion of the latest figures on US inflation, combined with intense geopolitical pressure between Moscow and NATO, which weighs as much on risk appetite as on the prices of energy, leads to a very sharp reflux in the Euro/Dollar currency pair.
As a reminder on US inflation, the statistical high point on Thursday, the consumer price indices came out markedly higher, beyond expectations, and thus raising fears of a faster and stronger turn of the screw on the part of the Fed. Excluding food and energy (elements considered volatile), prices rose monthly by 0.6% in December, against a consensus of +0.5%. Already in November, these prices rose by 0.6%. At an annualized rate, prices are rising by 6%, unheard of since August 1982. Including energy and food, annual inflation is 7.5%. The 10-year Treasuries immediately crossed the 2% threshold. What relaunch the scenario of a “double” increase in federal rates next month, namely a rise of 50 bps at once.
“This is a very broad-based price increase in the United States in January.” gauge Bénédicte Kukla, Senior Investment Officer at Indosuez Wealth Management, who argues: “The temporary energy price increases and the repercussions on the supply chain are taking longer than expected to fade. Looking ahead, labor market tightness in some sectors is putting upward pressure on average hourly wages (up 5.7% on an annual basis in January, the highest rate in 15 years) and increasing the risk of lasting inflation.
For Vincent Boy (IG France), “the markets will be very attentive to the situation in Ukraine after the United States has (once again) clarified that Russia could invade Ukraine at any time now. They added that Moscow could come up with a surprise pretext to act, but so far Russia has shown no signs of further aggression following the build-up of its troops on the border.”
According to the White House, the Russian army is now ready to invade Ukraine at any time if President Vladimir Putin decides.
“The price of oil is thus closely monitored and could reach the threshold of 100 dollars in the short term and weigh a little more on the rise in inflation.” he continues.
At midday on the foreign exchange market, the Euro was trading against $1.1320 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. My very broad consolidation took shape below $1.1460 which is a chart resistance level. The field is immediately open towards the lower limit of this very wide range, around $1.1115.
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 1.1310 USD. The price target of our bearish scenario is at 1.1117 USD. To preserve the invested capital, we advise you to position a protective stop at 1.1371 USD.
The expected return of this Forex strategy is 193 pips and the risk of loss is 61 pips.
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.
