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#1 29-01-2025 11:33:21

johnedward
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From: Paris - France
Registered: 21-12-2009
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EUR/USD: Fed Funds not expected to change

EUR/USD: Fed Funds not expected to change


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Today is Fed day! Traders will be able to analyse the outcome of a new Fed's Monetary Policy Committee, and read in it the degree of assertion of independence from the executive. An independence in principle that Trump intends to undermine during his mandate, as he demands low rates...

See you at 20:00 (EU time) for the policy decision itself, which should not contain any surprises, but especially at 20:30 for the Fed press conference.

"The Fed must also prepare for its return and Donald Trump did not wait long to put pressure on Jerome Powell by judging that rates should "drop immediately". If the inflation figures have recently surprised positively, the members of the FOMC should nevertheless stand firm and keep rates unchanged", anticipates Thomas Giudici, head of bond management at Auris Gestion.

Nothing to expect on the rates themselves, but the slightest change in tone, or the slightest variation in the language elements used will be noted.

Emmanuel Auboyneau, Partner Manager at Amplegest warns that "Donald Trump's first post-election meeting will set the tone for monetary policy in the coming quarters. Beyond the expected status quo on rates, it is the message delivered by Jerome Powell that will be scrutinized. It is likely that he will take a wait-and-see approach by emphasizing the inflationary risk that has not disappeared. He should hold a very cautious speech, not ruling anything out at this stage, which seems normal given the uncertainties about the reality of the new president's first measures on future customs duties."

Tomorrow, Thursday, it will be the turn of the European Central Bank to complete its Governing Council, the equivalent of the FOMC. Two close meetings that will be an opportunity to take stock of the gap, in terms of objectives and strategy, between the two major banks on either side of the Atlantic.

"The monetary authorities in Frankfurt should probably lower the key rate again by 0.25 percentage points to 2.75% at their meeting on 30 January. Between now and the summer, two other reductions of the same order are to be expected, before the economy in the eurozone picks up slightly and the ECB ends its monetary easing, probably with a deposit rate of 2.25%", analyses Dr. Felix Schmidt, Senior Economist at Berenberg.

In terms of statistics on Tuesday, monthly orders for durable goods (including cars) fell by 2.1%, completely missing expectations. The Richmond Fed manufacturing index made an impressive recovery (-4) without managing to return to positive territory. As for the consumer confidence index (Conference Board), it stands at 104, not far from expectations, although slightly below.

Right now, the EUR/USD is trading at $1.0407.

KEY GRAPHIC ELEMENTS
The 50-day moving average (in orange) continues to constitute a solid technical and graphic barrier. In the shorter term, its 20-day counterpart (in dark blue) is acting as dynamic resistance. And this without the RSI oscillator positioning itself in the oversold zone. In the immediate future, the currency pair is tracing a negative harami structure in the upper part of the Bollinger bands. Once perfect parity is reached, namely $1 = 1 euro, an energetic buying reaction of protest could take place.

MEDIUM-TERM FORECAST
In view of the key graphic factors that we have mentioned, our opinion is negative in the medium term on the EUR/USD.

Our entry point is at $1.0411. The price target of our bearish scenario is at $1.0001. To preserve the capital invested, we advise you to position a protective stop at $1.0609.

The expected profitability of this Forex strategy is 410 pips and the risk of loss is 198 pips.

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