(News Bulletin 247) – The selling pressure remained firm on the Euro/Dollar currency pair on Thursday, the energy released being significant since the exit of a consolidation wedge (figure drawn in black and dotted on the graph). The Dollar is gaining ground with rising bond yields, against a backdrop of a firmer tone from a Fed that faces a dilemma: how to avoid the price/wage spiral without breaking the growth momentum. Board member, Lael Brainard, not really known for being specially hawkishhad announced the color earlier in the week, before the Minutes of the Fed confirm this offensive tone.
It is the whole question of the probability of a soft-landing (soft landing) which is landed. “During his speech on price stability, Jerome Powell acknowledged that the current context did not make a ‘soft landing’ for the economy obvious.” note the strategists of Lazard Frère Gestion in an economic note. “In other words, the Fed may need to implement a very sharp slowdown in growth to ease labor market tensions and stem inflationary pressures, which continue to build.”
An offensive tone, not yet aggressive, which raises questions on this side of the Atlantic as well. “While inflationary tensions are expected to persist, the ECB will have”, according to Thomas Giudici, co-head of bond management at Auris Gestion, “no other choice than to accelerate the normalization of its monetary policy, probably more quickly than the market anticipates, with a rate hike starting in September.” The ECB is finishing a meeting of its Board of Governors next week.
To follow on the macroeconomic side, the weekly registrations for unemployment benefits. Published at 08:00 this morning, the dynamics of German industrial production came out on a monthly basis for February at 0.2%, slightly above expectations.
At midday on the foreign exchange market, the Euro was trading against $1.0880 about.
KEY GRAPHIC ELEMENTS
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 from March 1 to 7, and continued selling mobilization in week 09, the picture remains gloomy. Especially since the exit of a bevel from below has been fully validated.
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 1.0879 USD. The price target of our bearish scenario is at 1.0686 USD. To preserve the invested capital, we advise you to position a protective stop at 1.0951 USD.
The expected return of this Forex strategy is 193 pips and the risk of loss is 72 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.