empty
 
 

Forex Analysis & Reviews: The euro didn't get ahead of the curve
time 08.12.2022 11:48 PM
time Relevance up to, 13.12.2022 02:57 PM

Why is the euro rising? It would seem that the EURUSD bulls have plenty of obstacles. The federal funds rate is higher than the ECB deposit rate. The U.S. economy is clearly stronger than the European economy, which has quite likely already plunged into recession. Investor fears are still very high. The armed conflict in Ukraine is far from over, the pandemic in China has not been defeated, monetary tightening by the Federal Reserve continues and is weighing on US stock indices.

In fact, markets are rising on expectations. There is always some narrative that investors are reeling from. Right now the narrative is that U.S. inflation will continue to slow down, the Fed will bring rates to 5%, and then take a long pause. However, if we go back to the summer, the main idea was a recession in the eurozone due to its proximity to the war zone and the energy crisis. The assumption was that the European Central Bank would not be able to raise borrowing costs even higher under such conditions.

By the end of 2022, it was clear that the EU was well prepared for winter. It had built up its gas reserves, which, coupled with warm weather, contributed to a drop in the price of blue fuel and a more optimistic picture of the economy of the currency bloc. The recession now appears shallow and short-lived. The ECB can raise rates with a clear conscience. At the same time, a number of comments from Governing Council officials, including chief economist Philip Lane, convinced markets that the cost of borrowing will rise by 50 bps.

Dynamics of expectations for ECB deposit rate increase in December

This image is no longer relevant

In fact, a single report of slowing European inflation in November does not mean that consumer prices have passed their peak. In addition, a series of strong macroeconomic indicators for the euro area makes the ECB feel confident. The currency bloc's economy is taking a hit from higher rates, so why not keep it up? For example, Bank of Slovakia President Peter Kazimir believes that borrowing costs can be raised by 75 bps in December.

This image is no longer relevant

Thus, the reasons for the EURUSD rally are clear. Moreover, due to the undervalued expectations for the deposit rate, the pair is able to go even higher. What can make it turn back? First of all, an unexpected acceleration of inflation in the US. And of course, the Fed's dissatisfaction with the weakening of financial conditions. That is why the euro bulls are in no hurry to add money to long positions. Why climb ahead? Isn't it better to wait for the important events of the week by December 16, put aside fears and open new longs with a clear conscience? The result of such passivity is consolidation.

Technically, the upper limit of the fair value range at 1.054 and the pivot level at 1.0565 prevents the price from reaching the target at 161.8% according to the Crab pattern. Even if these resistances are overcome, prior to the release of U.S. inflation statistics, EURUSD risks backtracking. Therefore, it is better to use the pullback for short-term selling.

EURUSD
Euro vs US Dollar
Select timeframe
5
min
15
min
30
min
1
hour
4
hours
1
day
1
week
Start trade
Start trade

บทวิเคราะห์ของทาง InstaForex จะทำให้คุณทราบถึงแนวโน้มของตลาด! ในการที่เป็นลูกค้าของทาง InstaForex นั้นคุณจะได้รับการบริการเพื่อการซื้อขายอย่างเต็มประสิทธิภาพอย่างมากมาย

  • Grand Choice
    Contest by
    InstaForex
    InstaForex always strives to help you
    fulfill your biggest dreams.
    เข้าร่วมการแข่งขัน
  • Chancy Deposit
    ฝากเงินในบัญชีของคุณใน $3,000 และรับ $1000 ไปเพิ่ม!
    ใน กุมภาพันธ์ ทางเราได้ออก$1000 ภายในแคมเปญ Chancy Deposit !
    คว้าโอกาสที่จะชนะด้วยการฝากเงิน $3,000 ไปในบัญชีเทรด เมื่อทำตามเงื่อนไขนี้แล้ว คุณก็จะกลายเป็นผู้เข้าร่วมแคมเปญ
    เข้าร่วมการแข่งขัน
  • เทรดให้ดีแล้วคว้ารางวัล
    เติมเงินในบัญชีของคุณอย่างน้อย $500 สมัครเข้าร่วมการแข่งขัน และลุ้นรับรางวัลอุปกรณ์ติดต่อสื่อสารแบบพกพา
    เข้าร่วมการแข่งขัน
  • โบนัส 100%
    โอกาสพิเศษของคุณในการรับโบนัส 100% จากเงินฝากของคุณ
    รับโบนัส
  • โบนัส 55%
    สมัครรับโบนัส 55% สำหรับการฝากทุกครั้ง
    รับโบนัส
  • โบนัส 30%
    รับโบนัส 30% ทุกครั้งที่คุณเติมเงินในบัญชีของคุณ
    รับโบนัส

Recommended Stories

EUR/USD. What did Nonfarm say?

Friday's report suggests that the Fed will remain moderately hawkish on the prospects for monetary tightening at its March meeting. We are talking about an almost guaranteed increase in interest

Irina Manzenko 22:57 2023-02-05 UTC+2

The euro sets a bad example

The European Central Bank was late to the party and is now trying to convince investors that it will be the last to leave. In other words

Marek Petkovich 13:02 2023-02-05 UTC+2

GBP/USD: brief results and expectations

The Bank of England raised its rate by 50 bps to 4%, the highest level since October 2008. However, the Bank forecasts that annual U.K. inflation will fall from

Jurij Tolin 12:59 2023-02-05 UTC+2

Analysis of the trading week of January 30–January 3 for the GBP/USD pair. COT report.

The GBP/USD currency pair has also begun a very strong decline this week. Despite its drop from about a month ago, we also anticipated a decline in the value

Paolo Greco 18:15 2023-02-04 UTC+2

Analysis of the trading week of January 30–February 3 for the EUR/USD pair.

The EUR/USD currency pair has attempted to maintain its recent upward trend once more this week, although, during the past two weeks, it has begun to noticeably drop. About

Paolo Greco 17:39 2023-02-04 UTC+2

The U.S. dollar is losing its appeal as a safe haven: what does this mean for the EUR/USD pair?

A strong U.S. dollar was one of the main headwinds for gold and all precious metals last year as investors embraced the currency as a safe haven. But this forecast

Irina Yanina 16:42 2023-02-03 UTC+2

Weak US jobs data will support equities and put pressure on dollar

Markets continued to take advantage of the positive sentiment that emerged after the FOMC meeting on Wednesday. This is not surprising since the start of the new year, they have

Pati Gani 13:22 2023-02-03 UTC+2

GBP/USD. Overview for February 3. 2023

The GBP/USD currency pair increased as well, though far less significant than the EUR/USD pair. Additionally, this situation ought to have caused traders to pause. Why is the euro strengthening

Paolo Greco 11:20 2023-02-03 UTC+2

EUR/USD. Overview for February 3, 2023

The EUR/USD currency pair was moving in multiple directions on Thursday, but the previous evening it left the side channel it had been in for the previous three weeks

Paolo Greco 10:47 2023-02-03 UTC+2

Bitcoin rallies on Powell's remarks

Bitcoin's 40% rally in January, the best in a month since 2020, massive capital inflows into cryptocurrency-focused ETFs, and a $250 billion increase in market capitalization over the past four

Marek Petkovich 10:17 2023-02-03 UTC+2
หากไม่สะดวกคุยในตอนนี้
ระบุคำถามไว้ได้ใน แชท.