empty
 
 

Forex Analysis & Reviews: EUR/USD. Calm before the storm: the pair is loitering around 1.0200
time 08.08.2022 03:58 PM
time Relevance up to, 09.08.2022 01:16 PM

The euro-dollar pair started the trading week without unnecessary emotions. The price is loitering around the 1.0200 mark, against the backdrop of an almost empty economic calendar on Monday. Neither buyers nor sellers of EUR/USD are showing excessive ambitions ahead of the publication of US inflation reports. On Wednesday we will find out the dynamics of the consumer price index, on Thursday the release of data on the growth of the producer price index will be made public, and on Friday—the import price index. It is obvious that the CPI report will set the tone for trading, so traders are now behaving very uninitiatively.

This image is no longer relevant

Recall that the data on the growth of the US labor market, published on Friday, surprised with its "green color": the growth rate in the number of people employed in the non-agricultural sector jumped to 528,000, while the growth forecast was only up to 250,000. Unemployment, in turn, fell to 3.5%, while the average hourly wage rose by 5.2%. Almost all components of Friday's report came out in the "green zone," after which hawkish expectations about the next steps of the Fed increased significantly.

So, if a week and a half ago the probability of a 75-point rate increase at the September meeting was estimated at 30%, then at the moment, according to CME Group, the market is 68% sure that this scenario will come true. That is why the upcoming inflationary releases are of particular importance for the EUR/USD pair: if they also exceed the expectations of experts, the dollar will organize a rally throughout the market.

It should be emphasized here that despite the growth of hawkish expectations, not all Fed representatives are ready to support a 75-point rate increase following the next meeting. For example, Chicago Fed President Charles Evans recently said that a 50 basis point rate hike "is a reasonable estimate for the Fed's September meeting." In turn, San Francisco Fed President Mary Daly (who has a vote on the Committee this year) also spoke in favor of a 50 basis point increase, noting that this "would be a reasonable move in September." But at the same time, she added that if the regulator sees a further increase in inflation, then "maybe a 75 basis point increase will become more appropriate."

A similar position was also voiced by a member of the Fed's Board of Governors, Michelle Bowman, who has a permanent vote in the Committee (by position). She says she "strongly supports" a 0.75 percentage point rate hike in July. However, she signaled that she would support a similar decision in September "if we don't see inflation coming down in a consistent, meaningful and sustained way."

Simultaneously with these signals, the analysts of the Goldman Sachs conglomerate voiced their forecast, which is very restrained. The bank's currency strategists maintained their view that the US regulator will increase the rate by 50 basis points next month, despite strong data on US nonfarm payrolls and wage growth. According to them, strong non-farms are not able to "move" the position of the majority of the members of the Committee who have the right to vote. However, Goldman Sachs also makes an important reservation here. According to experts, only a further rise in inflation will still allow the Fed to "without hesitation" resort to more aggressive monetary tightening measures (that is, resort to a 75-point rate hike).

In other words, the upcoming inflation reports will tip the balance one way or the other. Nonfarm payrolls created certain prerequisites for tougher decisions by the Fed in September, while inflation is able to "cement" such assumptions. Obviously, the dollar will react to these releases accordingly.

For this reason, the EUR/USD pair froze in place, demonstrating weak price fluctuations at the start of a new trading week. US inflation can really "redraw" the fundamental picture—both in favor of the greenback and against it. Given such uncertainty, it is best to take a wait-and-see position for the pair. A more risky option is to enter sales on upward price pullbacks. Longs, in my opinion, in any case, look unacceptable.

Technology paints a mixed picture. On the daily chart, the price is located on the middle line of the Bollinger Bands indicator, as well as on the Tenkan-sen and Kijun-sen lines, which intertwined around 1.0190. All this suggests that traders have not decided on the vector of price movement, even in the corridor 1.0120–1.0280, within which the pair has been trading for the third week. Therefore, today it is most expedient to be out of the market, given the upcoming "high-profile" events of a fundamental nature.

Irina Manzenko,
Chuyên gia phân tích của InstaForex
© 2007-2023
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

InstaForex analytical reviews will make you fully aware of market trends! Being an InstaForex client, you are provided with a large number of free services for efficient trading.

  • Grand Choice
    Contest by
    InstaForex
    InstaForex always strives to help you
    fulfill your biggest dreams.
    THAM GIA CUỘC THI
  • Tiền gửi lần truy cập
    Ký quỹ tài khoản của bạn với $3000 và nhận được $10000 nhiều hơn!
    Trong Tháng 01 chúng tôi xổ $10000 trong chiến dịch Chancy Deposit!
    Có được một cơ hội giành chiến thắng bằng việc ký quỹ $3000 vào một tài khoản giao dịch. Đáp ứng được điều kiện này, bạn trở thành một người tham gia chiến dịch.
    THAM GIA CUỘC THI
  • Giao dịch khôn ngoan, thành công
    Nạp tiền vào tài khoản của bạn với ít nhất $ 500, đăng ký cuộc thi và có cơ hội giành được các thiết bị di động.
    THAM GIA CUỘC THI
  • 100% tiền thưởng
    Cơ hội duy nhất của bạn để nhận 100% tiền thưởng khi gửi tiền
    NHẬN THƯỞNG
  • 55% Tiền thưởng
    Đăng ký tiền thưởng 55% cho mỗi lần gửi tiền của bạn
    NHẬN THƯỞNG
  • 30% tiền thưởng
    Nhận 30% tiền thưởng mỗi khi bạn nạp tiền vào tài khoản của mình
    NHẬN THƯỞNG

Recommended Stories

The euro has a good chance

According to a survey of analysts, the European Central Bank's decision to raise interest rates by 50 basis points is already final, so the euro has a high probability

Jakub Novak 12:01 2023-01-27 UTC+2

GBP/USD. Overview for January 27, 2023

On Thursday, the GBP/USD currency pair maintained its upward trend. If we consider the daytime, which is the period of greatest activity, the US dollar increased for little more than

Paolo Greco 11:47 2023-01-27 UTC+2

EUR/USD. Overview for January 27, 2023

The EUR/USD currency pair is gradually increasing. This is because nothing has changed over the last day, as we have stated. The present upward trend will not be interrupted even

Paolo Greco 11:35 2023-01-27 UTC+2

Economic growth in the US was strong at the end of 2022

The key takeaway from yesterday's Q4 GDP report was that economic growth in the US was strong at the end of 2022, thanks to the strong labor market and lower

Irina Yanina 11:25 2023-01-27 UTC+2

Soft landing of the US economy could boost markets, but pressure dollar

Mixed economic data from the US had caused a downturn in stock markets, but the situation leveled off later, allowing indices to crawl back up again. The reports indicated that

Pati Gani 10:08 2023-01-27 UTC+2

EUR/USD. U.S. GDP growth was better than expected, but the dollar reacted weakly to the report

The euro-dollar pair reacted erratically to the latest US GDP report. Initially, the price fell to the lower limit of the 1.0850-1.0950 range, then returned to the area

Irina Manzenko 22:52 2023-01-26 UTC+2

EURUSD: Can ECB push EUR higher?

If the market does not go in the direction it is expected to be seen, it is more likely to go in the opposite direction. Will this principle of technical

Marek Petkovich 17:39 2023-01-26 UTC+2

Fresh data on US inflation could determine the path of the Fed

Before the Fed holds its first committee meeting for this year, a report on core PCE will be released, which will definitely have an impact on the decisions the central

Irina Yanina 15:08 2023-01-26 UTC+2

The Fed will start lowering the rate when inflation drops to 3%

British and European currencies are still in strong demand and are not declining. I have already discussed the potential complexity of the rising sections of the trend, as well

Chin Zhao 13:48 2023-01-26 UTC+2

Gold continues to attract new investors

The gold market continues to attract the attention of new investors. After a bad year for equity and bond markets, one Swiss pension fund is looking to diversify its holdings

Irina Yanina 12:10 2023-01-26 UTC+2
Không thể nói chuyện ngay bây giờ?
Đặt câu hỏi của bạn trong phần trò chuyện.