EUR/USD: US inflation summit?

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(News Bulletin 247) – The Euro continued to suffer against the Dollar, at around $1.0560, in a thin tidy since the end of April, in the absence of risk appetite on the financial markets. Currency traders will turn their attention tomorrow, with great attention, to the inflation figures (CPI) in the United States, which “will be a major indicator for the markets. And take on a particular character because unlike previous months, the consensus is counting this time on a less strong increase in prices”, for Alexandre Baradez (IG France). The challenge is to situate the peak of inflation over time.

“Summiting US inflation doesn’t necessarily mean a rapid relapse in prices, but markets could start to shift their one-way view and consider a more ‘consolidating’ stage. And that could start to show with a start. inflection of appetite for the dollar, thus benefiting the euro.”

On the largest basket of products, food and energy included, last month, the US Bureau of Labor Statistics published an annualized price increase of +8.5%.

Yesterday traders took note of the Sentix index of investor confidence in the Euro Zone, which continued to contract, sinking further into negative territory, at -22.6, missing expectations. As a reminder, the Sentix Economic Index is calculated monthly from a survey of more than 5,000 private and institutional investors on their assessment of the economic situation and their economic expectations for the next 6 months.

This morning, the German ZEW came out above expectations, albeit in negative territory at -34.3. Professor Achim Wambach, Chairman of ZEW, shed the following light: “The ZEW Economic Sentiment Indicator rose moderately this month but still remains at a relatively low level. Compared to last month, the outlook for the The economic situation in Germany is therefore somewhat less pessimistic.Experts still assume that it will continue to deteriorate, but at a slower pace than previously expected.Strong restrictions in China to combat new Covid-19 infections are leading to a sharp decline in the toll of the current economic situation in China. It is a heavy weight for the future development of the German economy. As for the direction of the ECB’s monetary policy, a large majority of experts expect interest rates to rise over the next six months.As a result, they expect inflation rates to decline from their current very high level”.

At midday on the foreign exchange market, the Euro was trading against $1.0560 approximately.

KEY GRAPHIC ELEMENTS

While the underlying bearish bias remains on the currency pair, the entry point is no longer optimal since the start of a rebound yesterday after the Fed’s decisions and the press conference. Forex traders will therefore prefer to stall, waiting for a much more interesting entry point.

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 1.0454 USD and the resistance at 1.0758 USD.

CHART IN DAILY DATA

©2022 News Bulletin 247

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