(News Bulletin 247) – The Euro continued to lose ground against the safe-haven Dollar, in the highly stressful context of the ongoing invasion of Ukraine by Russian troops, with the capital Kiev now finding itself in a vice. Risk appetite in the financial markets is non-existent, due to fears of an acceleration of inflation by energy prices. Remember that the supplies of Germany, the leading economic power in the Euro Zone, depends almost 55% on Russia. And the ongoing discussions between Western delegations on a potential boycott of Russian oil have just propelled crude to very firm prices: a barrel of Texan light crude exceeded $125 a few hours ago. “This decision could put a little more pressure on the US Federal Reserve regarding the tightening of its monetary policy, as Jerome Powell confirmed a hike of only 25 basis points at the next FOMC to be held next week”, for Vincent Boy, market analyst IG France, who wants to check the appointment of the ECB, first of all. The Frankfurt monetary institution ends Thursday a new meeting of its Board of Governors.
“Although it is still expected to be accommodating, its speech could be a little stronger concerning the tightening of monetary policy, in order to counter inflation, but also to stem the fall of the euro against the dollar.” , continues Mr. Boy (IG France). Pay attention to the elements of language used in a press conference.
“We expect the ECB to revise its quarterly inflation projections upwards and remain open to a faster end to net asset purchases compared to the plan set out in December, once the current crisis subsides. .”, for Konstantin VEIT, portfolio manager at PIMCO. “Longer-term, there remains great uncertainty over the definition of a neutral policy rate for the Eurozone, but a rate between 0% and 1% seems reasonable compared to other geographies.”
In terms of statistics on Friday, the NFP (Non Farm Payrolls) report, the federal monthly employment report, highlighted job creations well above expectations (+678,000 in the non-agricultural private sector) as well as a more higher than expected in the unemployment rate, at 3.8% of the active population. This Monday, the Euro Zone Investor Confidence Index (Sentix) has just been published, plummeting to -7.0, the lowest since November 2020. Sentix is ​​an analysis firm specializing in behavioral finance. The indicator produced is calculated after analysis of a questionnaire sent to 2,800 investors and analysts on their economic forecasts for the Euro Zone within six months.
At midday on the foreign exchange market, the Euro was trading against $1.0910 about.
The Euro continued to lose ground against the safe-haven Dollar, in the highly stressful context of the ongoing invasion of Ukraine by Russian troops, the capital Kiev, now finding itself in a vice. Risk appetite in the financial markets is non-existent, due to fears of an acceleration of inflation by energy prices. Remember that the supplies of Germany, the leading economic power in the Euro Zone, depends almost 55% on Russia. And the ongoing discussions between Western delegations on a potential boycott of Russian oil have just propelled crude to very firm prices: a barrel of Texan light crude exceeded $125 a few hours ago. “This decision could put a little more pressure on the US Federal Reserve regarding the tightening of its monetary policy, as Jerome Powell confirmed a hike of only 25 basis points at the next FOMC to be held next week”, for Vincent Boy, market analyst IG France, who wants to check the appointment of the ECB, first of all. The Frankfurt monetary institution ends Thursday a new meeting of its Board of Governors.
“Although it is still expected to be accommodating, its speech could be a little stronger concerning the tightening of monetary policy, in order to counter inflation, but also to stem the fall of the euro against the dollar.” , continues Mr. Boy (IG France). Pay attention to the elements of language used in a press conference.
“We expect the ECB to revise its quarterly inflation projections upwards and remain open to a faster end to net asset purchases compared to the plan set out in December, once the current crisis subsides. .”, for Konstantin VEIT, portfolio manager at PIMCO. “Longer-term, there remains great uncertainty over the definition of a neutral policy rate for the Eurozone, but a rate between 0% and 1% seems reasonable compared to other geographies.”
In terms of statistics on Friday, the NFP (Non Farm Payrolls) report, the federal monthly employment report, highlighted job creations well above expectations (+678,000 in the non-agricultural private sector) as well as a more higher than expected in the unemployment rate, at 3.8% of the active population. This Monday, the Euro Zone Investor Confidence Index (Sentix) has just been published, plummeting to -7.0, the lowest since November 2020. Sentix is ​​an analysis firm specializing in behavioral finance. The indicator produced is calculated after analysis of a questionnaire sent to 2,800 investors and analysts on their economic forecasts for the Euro Zone within six months.
At midday on the foreign exchange market, the Euro was trading against $1.0910 about.
KEY GRAPHIC ELEMENTS
The transition phase between February 4 and 23, in the form of a slip without federation, under the 100-day moving average (in orange) is over. The underlying bearish bias aligns with the short term, and the plot of a candle conspicuous by its red body on Thursday 2/24 illustrates the firm grip of the selling side. With 5 red bodied candles over the last 5 candles, the last one still being drawn, and continued selling mobilization this week, the picture remains bleak. We are reviewing our bearish targets, at $1.0685, then if necessary at $1.0454.
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 1.0924 USD. The price target of our bearish scenario is at 1.0455 USD. To preserve the capital invested, we advise you to position a protective stop at 1.1068 USD.
The expected return of this Forex strategy is 469 pips and the risk of loss is 144 pips.
CHART IN DAILY DATA
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