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#1 24-11-2022 15:04:05

Admin & Trader
From: Paris - France
Registered: 21-12-2009
Posts: 3368

EUR/USD: a period of nervous consolidation

EUR/USD: a period of nervous consolidation

The USD lost a few pips yesterday against the EUR as the Minutes were relatively more "accommodative" - with the appropriate inverted commas - than expected. The minutes were a frank opportunity to refine the neutral rate outlook and to anticipate the future shape of the Fed Funds curve. While judging the need to continue the fight against inflation, the majority of the members thought that the scenario of a slowdown in Fed Funds increases was "appropriate". A rising curve, therefore, but a little flatter, with an end point (terminal rate) that may be important.

On the macroeconomic side, operators have taken note of the PMI (barometer of activity calculated after surveys of purchasing managers) in the Eurozone. The deviations from the consensus are rather limited, although all components remain significantly below the 50 mark. The only positive surprise was the German industrial score, which rose by 1.5 points. In the US, weekly jobless claims, while not showing any easing on the employment front, came in above the consensus level for week 46, at 235,000 new units. Durable goods orders, excluding transport equipment, gained 0.5% in monthly terms in October, beating the target.

US benchmarks will be scarce until early next week, due to today's Thanksgiving holiday. Wall Street is closed and will only reopen tomorrow for a shortened session.

In the meantime, traders will have been pleasantly surprised to see the IFO business climate index in Germany rise more than expected, to 86.4. IFO Director Klaus Wohlrab offers the following insight: "In manufacturing, the index rose sharply, companies were less pessimistic about the future, but in energy-intensive industries, uncertainty increased further. [...] Expectations recovered somewhat, but remained deeply pessimistic."

Right now, the pair is trading at $1.0418.

Volatility remains high on the spot market, which is tracing a broad consolidation, the structure of which remains to be defined, around $1.03. A continuation of these nervous oscillations is the preferred option, a scenario that is not very attractive for taking positions. We prefer to stay out of the spot for the time being.

Given the key chart factors we have mentioned, our medium-term view on the EUR/USD is neutral.

We will maintain this neutral view as long as the EUR/USD is positioned between support at $1.0175 and resistance at $1.0484.

"Anything worth having is worth going for - all the way." - J.R. Ewing



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