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#1 31-01-2024 13:34:08

johnedward
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From: Paris - France
Registered: 21-12-2009
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EUR/USD: March is too early

EUR/USD: March is too early


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The EUR/USD was moving this Wednesday within increasingly narrow margins as the end of the Fed's monetary policy meeting approaches. The initiatives are suspended, not on the verdict - a status quo is acquired - but on the elements of language which will be used at the press conference. Will these be likely to reinforce the likelihood of a first reduction in Fed Funds before June?

One thing is certain, "the Fed can boast about having time to act", says Thomas Giudici, head of bond management at Auris Gestion.

"US growth for the 4th quarter of 2023 thus came out well above expectations at 3.4% at an annualised rate compared to a forecast of 2%. Given the restrictive context of monetary policy, the US economy is all truly exceptional! Driving growth, household consumption is more than resilient, with an acceleration in services. Americans have clearly benefited from the increase in their real wages thanks to the ongoing disinflation movement, with PCE inflation going from 2.5% to 1.6% on an annual basis over the quarter."

The American consumer confidence data (Conference Board index), coming out above expectations, reinforced this working matrix. New job offers (JOLTS) also argued for continued tensions, without wages overheating at this stage.

"After the European Central Bank which maintained its rates last week, today it is the turn of the Federal Reserve to seek to put an end to the idea of a rate cut in March. This does not mean saying that the Fed will rule out the idea of a rate cut, but simply that March is too early for a central bank that depends on data," says Mike Hewson of CMC Markets.

Right now, the EUR/USD is trading at $1.0840.

KEY CHART ELEMENTS
Interestingly technical fact, the 20-day moving average (in dark blue, bearish), is currently breaking its 50-day moving average (in orange, horizontal), a first contact since November 13. The graphic and technical situation is tensing under this trend curve.

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

We will maintain this neutral opinion as long as EUR/USD prices are positioned between support at $1.0762 and resistance at $1.0940.

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