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#1 30-11-2022 09:17:27

johnedward
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From: Paris - France
Registered: 21-12-2009
Posts: 3421
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EUR/USD: nervous price action with no clear trend

EUR/USD: nervous price action with no clear trend


Volatile crosshatch movements continue in the EUR/USD around the $1.3 mark, in a foreign exchange market that has a worried, and therefore detrimental to risk currencies, eye on the ridiculous health (and especially social) situation in China. Harsh restrictions are multiplying. Beijing has closed parks and museums, Shanghai is banning newcomers to the city from restaurants, markets and shopping centres for the next few days! In an extremely rare move, a wave of protests developed this weekend in major cities as demonstrators voiced their displeasure with the measures. According to AFP, this appears to be the largest mobilisation since the 1989 pro-democracy riots, marked by the Tiananmen Square crackdown.

In terms of stats, there's not much to report, especially as Wall Street has just finished digesting the traditional Thanksgiving turkey.

The monetary policies of the Fed and the ECB remain more than ever at the heart of the game. "What will be most important for central bankers will remain the speed at which inflation declines," said Vince Manuel, Chief Investment Officer, Indosuez Wealth Management. "The normalisation of labour market conditions continues to be accompanied by strong and broad-based wage growth. The increase in unemployment and benefit claims is still modest and not adjusting as quickly as the actual level of GDP growth would suggest."

"We're heading for a recession in the euro area, perhaps shallower than expected and with a significant fiscal multiplier effect in the less indebted Member States. In the US, the slowdown is starting, but inflation is the main concern," he adds.

Right now, the EUR/USD is trading at $1.0376.

KEY CHART ELEMENTS
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.

MEDIUM-TERM FORECAST
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 $1.0100 and resistance at $1.0484.

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