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#1 25-02-2021 12:46:22

johnedward
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From: Paris - France
Registered: 21-12-2009
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EUR/USD: the euro regains levels unseen since early January

EUR/USD: the euro regains levels unseen since early January


Mr. Powell is holding strong: his commitment to maintain an accommodating monetary policy in the long term has accentuated the weakening of the dollar in favor of the euro, which was up yesterday to $1.2229, on levels that had not been seen since 7 January.

Powell continued the series of half-yearly hearings before the Senate. The Fed Chairman brought some appeasement, some relief, by dismissing the scenario of a faster than expected tightening of credit conditions. The steering of the yield curve by monetary tools will have to be finely tuned. "One thing is certain", according to BRED's research, "the President of the Fed does not want to embody the man who will slow down the American recovery by talking about rate hikes, even if some people think that we are entering a "minor" period of overheating."

"After Christine Lagarde on Monday, Powell also distilled a message of caution during his hearing in the Senate, which helped limit the upward movement of sovereign rates in the United States as well as in Europe", notes Philippe Cohen, deputy director of Kiplink Finance. However, the easing was short-lived, as government bond yields began to rise again in the morning on the other side of the Atlantic, before Powell returned to the bedside of worried investors in the early afternoon. At a hearing before the House of Representatives this time, the Fed boss said the monetary institution would not raise rates until inflation exceeded its target (set at 2%). "We think we can do it. It could take more than a few years," he adds.

On the macroeconomic front, there wasn't much to get your teeth into yesterday in a market that was in any case monopolised by the analysis of the language Powell used before the US Congress. Let us note all the same a weekly surprise increase in crude oil stocks across the Atlantic (+1.2 million barrels), versus a contraction of 7.2 million the previous week.

Today, on the other side of the Atlantic: the preliminary data for Q4 GDP, orders for durable goods and weekly registrations for unemployment benefits at 14:30, as well as ongoing home sales at 16.00.

Right now, the pair is trading at around $1.2233.

KEY CHART ELEMENTS
Exceeding the 20-day moving average (in dark blue) invites us to take a "time out". The inscription of a significant high wick (shadow) on the candle of the day would, if necessary, change the situation, but we are not there yet. Neutral advice for the immediate future: active traders should therefore avoid taking a stand until a suitable entry point is found.

MEDIUM-TERM FORECAST
In view of the key chart factors we have mentioned, our opinion is neutral in the medium term on the EUR/USD's exchange rate.

We will maintain this neutral view as long as the Euro Dollar (EURUSD) is positioned between support at $1.2210 and resistance at $1.2397.

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