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The sharp downward acceleration of the Euro, or rather the rise of the Dollar, which began on November 6, well before the final verdict of the American ballot boxes, accentuates at the end of the morning, with the surge in the American 10-year, now in the immediate vicinity of 4.45%. Such a return had not been seen since the very beginning of July. It then experienced a peak before relaxing.
It is now official, Donald Trump will recover the keys to the White House in January, at the end of a campaign full of twists and turns, and marked by intense suspense. Ultimately, the gap between the two candidates could be very significant. After his victory in the state of Wisconsin, which has ten electoral votes, Donald Trump is now assured of being elected President of the United States. For now, the Republican has 276 electors, while 270 are needed to reach the White House.
The Republican camp has also regained control of the Senate, one of the two chambers of the American Congress, from the Democrats. The House of Representatives is still in play.
For several weeks, US bond rates had gained ground in anticipation of a Donald Trump victory in the presidential election. The slightly more favorable dynamic for Kamala Harris in recent days has resulted in a decline in yields.
Donald Trump’s program is seen as being more inflationary than that of Kamala Harris and more of a source of budget deficit. And therefore synonymous with increased yields.
In terms of statistics yesterday, admittedly in the background, there was little to eat. Let us still mention the ISM services index, which came out well beyond the target, at 56 points.
The Fed will therefore have as a working basis the name of the next President, as two days of meetings of the Monetary Policy Committee (FOMC) begin. Meeting which should, barring any major surprises, result in a 25 basis point reduction in the main key interest rate.
At midday on the foreign exchange market, the Euro was trading against $1.0742 approximately.
KEY GRAPHIC ELEMENTS
The currency pair has just emerged from the bottom, in intense volatility, from a wedge pattern, which confirms the now underlying bearish bias.
MEDIUM TERM FORECAST
Considering the key graphical factors that we have mentioned, our opinion is negative in the medium term on the Euro Dollar (EURUSD).
Our entry point is at 1.0735 USD. The price target for our bearish scenario is at 1.0371 USD. To preserve the invested capital, we advise you to position a protective stop at 1.0841 USD.
The expected profitability of this Forex strategy is 364 pips and the risk of loss is 106 pips.
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