The high inflation in U.S. and the uncertainty of the Fed's speech (Dovish or Hawkish) had the biggest focus for a month. In this post ill explain as briefly as possible how the market has been reacting accordingly since May 13.
- After the inflation reading in the macroeconomic calendar showed a rise of (4.2% above FED's 2% target) the Bearish market has been trying to break below the 1.2050 to mark the 1.20 in exchange rate which was very illogic to happen and ended with failure, the exchange rate then was to be (1.21-1.22), in forex market translation (1.2050-1.2250).
- The EU inflation reading showed a modest rise but it is wise to take into account that in EU there was a long term of deflation so it wasn't a reason to sell EUR, therefore the exchange rate changed to (1.22-1.23), in forex market (1.2150-1.2350).
- The reason there was a failure to test 1.23 was the upbeat U.S. data that signed for a fast economic recovery, and from this point the exchange rate changed to (1.22-1.21), in forex market (1.2250-1.2150)
- The NFP less than forecasted release and the strong rise in U.S. hourly wages have shortly pushed for inflation worries, and therefore there was a pullback to 1.2180.
WILL THE EXCHANGE RATE RISE AGAIN? IS IT POSSIBLE TO TEST A MAIN TREND HIGHER HIGH AGAIN?(1.2300)?
- I would say that it is wise to remember the exchange rate has been holding the 1.22 for almost a month (has to mark 1.23 or 1.21 due Thursday), the whole economic outlook prevent a visit to 1.23 , also all fundamentals lead to forecasting the ECB being dovish on Thursday release (negative to EUR), therefore it is very likely to consolidate above the 1.2150 on Monday and it is possible to break below it being capped by 1.2080 till the ECB interest rate release on Thursday and if it happens to be dovish, then the price will be forced to break below 1.2050.
- In other words I don't expect a break above 1.2200, I expect the price range to be (1.2200-1.2080) , with a prospect of breaking below (1.2050) following (Dovish ECB expected on Thursday).
-- THIS PICTURE REMAINS ONLY TILL UPCOMING NEWS AND DATA, SO I WILL UPDAT ACCORDINGLY --
- After the inflation reading in the macroeconomic calendar showed a rise of (4.2% above FED's 2% target) the Bearish market has been trying to break below the 1.2050 to mark the 1.20 in exchange rate which was very illogic to happen and ended with failure, the exchange rate then was to be (1.21-1.22), in forex market translation (1.2050-1.2250).
- The EU inflation reading showed a modest rise but it is wise to take into account that in EU there was a long term of deflation so it wasn't a reason to sell EUR, therefore the exchange rate changed to (1.22-1.23), in forex market (1.2150-1.2350).
- The reason there was a failure to test 1.23 was the upbeat U.S. data that signed for a fast economic recovery, and from this point the exchange rate changed to (1.22-1.21), in forex market (1.2250-1.2150)
- The NFP less than forecasted release and the strong rise in U.S. hourly wages have shortly pushed for inflation worries, and therefore there was a pullback to 1.2180.
WILL THE EXCHANGE RATE RISE AGAIN? IS IT POSSIBLE TO TEST A MAIN TREND HIGHER HIGH AGAIN?(1.2300)?
- I would say that it is wise to remember the exchange rate has been holding the 1.22 for almost a month (has to mark 1.23 or 1.21 due Thursday), the whole economic outlook prevent a visit to 1.23 , also all fundamentals lead to forecasting the ECB being dovish on Thursday release (negative to EUR), therefore it is very likely to consolidate above the 1.2150 on Monday and it is possible to break below it being capped by 1.2080 till the ECB interest rate release on Thursday and if it happens to be dovish, then the price will be forced to break below 1.2050.
- In other words I don't expect a break above 1.2200, I expect the price range to be (1.2200-1.2080) , with a prospect of breaking below (1.2050) following (Dovish ECB expected on Thursday).
-- THIS PICTURE REMAINS ONLY TILL UPCOMING NEWS AND DATA, SO I WILL UPDAT ACCORDINGLY --