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#1 18-09-2023 16:29:46

Admin & Trader
From: Paris - France
Registered: 21-12-2009
Posts: 3526

EUR/USD: After the Governor's Council meeting, the FOMC one is up next

EUR/USD: After the Governor's Council meeting, the FOMC one is up next...

The euro remains under pressure against the dollar, in a climate of unclear risk appetite, between the monetary policy meetings of the ECB (last week) and the Fed (this week).

If the powerful Frankfurt Monetary Institution increased the rent of the euro by a quarter of a basis point, it suggested that this turn of the screw would probably be the last, before entering a plateau phase. A source of relief in the trading rooms, which can be based on the idea of finally reaching a terminal rate, in the absence of a pivot scenario. The ECB, which has significantly lowered its growth forecasts and raised its inflation extrapolation curve, therefore intends not to give up its efforts.

"The ECB press release and Christine Lagarde's speech [have] given substance to the hypothesis that the peak in rates had been reached", says Alex Baradez (IG France).

In terms of stats on Friday, targets were largely exceeded on the Empire State index (NY Fed manufacturing index) and on the monthly report on American industry. On the other hand, the consumer confidence index (U-Mich, preliminary data) sank to 67.8.

If this week begins very discreetly on this point, with the NAHB index of the American residential market only, the program will expand with consumer prices in the Euro Zone tomorrow. The outcome of the Fed's FOMC is scheduled for Wednesday at 20:00 (European time). The highly anticipated press conference will begin at 20:30. Even if a status quo on rates itself is almost acquired, Christian Scherrmann, US Economist DWS, thinks that "far from declaring victory on inflation, the Fed will most likely maintain its usual hawkish orientation, namely higher prices for more a long time."

The motto "Higher for Longer" would then become "High for Longer and Longer"...

Right now, the EUR/USD is trading at $1.0678.

The almost complete retracement of July's gains does not militate at this stage for a continuation of the advance of the currency pair, without formally excluding it. This retracement, by its magnitude, weakens the bullish message then delivered over a good part of the month of July. The outcome of the ongoing test of the 50-day moving average (in orange) will be decisive. The bearish message takes shape with the break - now validated - of the 50-day moving average by its 20-day counterpart (in dark blue), at a significant angle. The short position will be retained as long as the latter gravitates below the first. The advantage of this investment plan is the discipline that it inherently induces.

Considering the key graphical factors that we have mentioned, our opinion is positive in the medium term on the EUR/USD.

Our entry point is at $1.0673. The price target for our bullish scenario is $1.0436. To preserve the capital invested, we advise you to position a protective stop at $1.0772.

The expected profitability of this strategy is 237 pips and the risk of loss is 99 pips.

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



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