2021-10-29 • Updated
On October 28 European Central Bank held a press conference. Inflation has hit Europe and now the time has come for more profound steps in the fight with the post-pandemic economy. What should we know to trade these events?
The central bank had announced in September it would be buying fewer bonds off the back of surging consumer prices. For now, ECB decided to keep interest rates and its monetary policy unchanged despite ongoing inflationary pressures. Inflation in the eurozone hit 3.4% in September, representing a 13-year high.
Some market participants believe the ECB is underestimating current inflationary pressures and will therefore likely have to announce a rate hike before the start of 2023. But Lagarde said that the rates won’t be hiked anytime soon and that their anticipation and their analysis on the economic situation is correct.
Moreover, if to speak about the US, rate hikes may come in the States way earlier. Inflation in the country has already hit 5.4% and doesn’t plan to stop. If so, USD may rise significantly against EUR.
The currency is in a precarious position. Although the falling wedge had been broken, which is quite bullish, lots of moving averages are ahead and the fundamentals are multidirectional. Nevertheless, if the EUR/USD pair overcomes the resistance at 1.17, then 1,18 will be the next stop.
EUR/USD daily chart
Resistance: 1.170; 1.180
Support: 1.158; 1.150
For the EUR/JPY pair, the figure is similar. While yen is weak amid QE continuation, euro may surge higher to the resistance at 134.4. But be aware of possible divergences on the RSI oscillator, they can help you to spot the upcoming reversal.
EUR/JPY daily chart
Resistance: 134.4; 135.0; 142.0
Support: 131.6; 130.8; 128.0; 127.0
The upcoming August inflation data may send mixed signals. The 12-month headline inflation rate is expected to rise to 3.6%, causing concerns for the Biden administration. However, core inflation, which excludes food and energy prices, is projected to decrease to 4.3%, aligning with the Federal Reserve's goals. Past price trends influence both figures, so looking at recent data for a more accurate picture is crucial.
The odds of a final interest rate hike by the US Federal Reserve (Fed) this year have dropped after US job openings hit their lowest levels since early 2021. This has led to a correction in the US Dollar as traders reduced their bets on further rate hikes.
Here we go again, my friends. It’s time to look critically into the future of what trading opportunities September might have in store for us. As always, it is essential to note that the views expressed here are mine and should not be considered financial advice without proper examination.
The past several weeks have been a real triumph for the bulls in the oil market. The Brent spot price grew by 8.5% during the last month.
Gold prices are rising for three consecutive days ahead of the Federal Reserve (Fed) interest rate decision, which is expected to remain unchanged due to declining inflation and a positive economic outlook. Investors are keen on the Fed's interest rate guidance, fearing a hawkish stance that could trigger market risk aversion.
Amid concerns of a Chinese economic slowdown, reports of declining investment often overlook China's efficient investment strategy in emerging sectors for long-term growth. China has taken measures to stabilize foreign and private sector investments, like reducing the reserve requirement ratio to boost investor confidence.
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