FOREX Fundamental analysis on September 9, 2022
ECB rate hike by 75 basis points was not a surprise to markets. On the contrary, investors, in addition to monetary easing, wanted to hear the "hawkish" speech of Christine Lagarde, but the head of the regulator somehow hesitated, saying that she did not know how high the rate hike could go, but markets should not consider such steps of the Central Bank, as in September, the norm. Also, Mrs. Lagarde said that there will be more than two, but less than five cuts.
The European Central Bank and its governor were unable to express their position clearly. When will the regulator raise the rate or launch a QT program? Once again Christine Lagarde left in the direction of the United States, although logically she should have paid more attention to the Eurozone economy and the single currency rate.
Most likely, we would not have seen a powerful EUR/USD bullish breakaway, if the pair had not been helped by the American stock indices. The S&P 500 rebounded again from the support of 39000, despite the harsh rhetoric of the Fed, the possibility of raising the rate on September 21 by 75 basis points to 86% and other factors that strengthen the dollar.
Jerome Powell on Thursday reiterated the Fed's resolve, but the S&P 500 has started to recover. Investors are most likely waiting for an early release of the August inflation report to show a decline from 9.5% to 8.1%, which means that the Fed will not raise rates by more than 50 basis points.
Traders are buying expectations again, which actually coincides with the technical picture on the three Elder screens. I also suggested to open purchases above 0.995 and to increase the volumes of longs on breakthroughs of 1.000 and 1.002. I suppose that before the US inflation report release it is too early to speak about medium-term shorts. It is possible that EUR/USD could rise to 1.012 and even 1.018. The pair's fixation below 1.003 will be a signal for new sales.