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EUR/USD: the dollar gives weakness

EUR/USD, currency, EUR/USD: the dollar gives weakness

FOREX Fundamental Analysis on October 4, 2022

The United Nations urges the world's central banks, especially the Fed, to stop tightening monetary policy, which is sure to end in a global recession. According to the UN, every 1.0% increase in the federal funds rate reduces the GDP of developed countries by 0.5% and of developing countries by 0.8% at once.

Thomas Barkin, head of the Federal Reserve Bank of Richmond, said in response to the statement that the Fed cares about the prospects of the global economy, but first of all the regulator will follow the situation in the United States.

UN worries are not in vain. The JP Morgan Global Purchasing Managers Index fell to a June 2020 low of 49.8p. Global manufacturing fell for the first time in two years, though business activity indices in the United States remain above 50p, but also show a downward trend.

Market participants viewed the comments of the Fed's spokesman as positive news, suggesting that due to the slowdown in the U.S. economy, the Fed will slow down monetary policy tightening or even begin to adjust to a "soft" course. Stock indices returned to growth, which through currency correlations helped the EUR/USD and GBP/USD bulls. Sterling rose above $1.13 as it additionally reacted to the information that the Treasury decided to postpone the income tax cut for rich Britons. In addition, the Bank of England calmed the markets by resuscitating the QE program.

Investors decided that once the worst is over, there is no point in defensive assets. The year 2022 introduced quite a lot of events in forex trading. This includes the war in Ukraine, the energy crisis in the Eurozone, and galloping inflation. There are more than enough drivers for EUR/USD to fall to a 20-year low. Not surprisingly, the volatility of currency pairs remains at high levels, which allows traders to make good profits.

However, no matter who says what, but rising global uncertainty is a good reason to buy the dollar. It is unlikely that in the near future the greenback will lose its protective role, especially now that winter begins, and nobody can say how Europe will survive it. There are also no forecasts about the end of Russian aggression in Ukraine, nor about the consequences of the Fed's aggressive monetary restriction.

Investors are unlikely to get rid of the dollar, so we consider the EUR/USD growth a temporary correction. In the format of the forex strategy of the day we do not refuse to buy the pair above 0.9850, but are ready to return to the medium-term sales at the rebound from 0.9885; 0.9950 and 1.0000.

 

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EUR/USD: banks do not believe in the long-term growth of the pair
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Forex analysis and forecast for GBP/USD for today, November 29, 2023
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Nov 29, 2023 Read
EUR/USD: Fed changes its course
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Nov 29, 2023 Read
USD/JPY: Bank of Japan will not change monetary policy
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Nov 28, 2023 Read
Forex analysis and forecast for GBP/USD for today, November 28, 2023
GBP/USD, currency, Forex analysis and forecast for GBP/USD for today, November 28, 2023 On Tuesday, GBP/USD traded in a varied manner, not retreating far from the local highs of September 1. Yesterday the pair strengthened slightly, playing off the weakness of the U.S. dollar.Rumors are growing in the market that the Fed may move to easing monetary policy faster than previously planned. At the same time, the Bank of England states that it will be difficult to achieve the inflation target of 2%, so the cycle of rate hikes is likely to continue.Sterling was also supported by UK Prime Minister Rishi Sunak's statement about attracting £29.5 bln of foreign investment.The UK Retail Prices Index was released today, recording a decline from 5.2% to 4.3%. The retail sales index for the month rose from (-36.0) to (-11.0).Analysts believe that the situation in the UK is improving, and the increase in consumer demand before the Christmas holidays will help the economic recovery.A number of Fed representatives will speak today.Technical analysis of GBP/USD for todayThe Bollinger Bands indicator on the Daily is headed for a strong rise, as is the MACD indicator, which maintains a buy signal. The Stochastic oscillator is in the area of maximum values.After price consolidation above 1.2650, we open purchases with a target of 1.2747. Stop-loss is set at 1.2600.If the pair drops below the support at 1.2600, we move to short positions with the target at 1.2500. Stop-loss is set at 1.2650.
Nov 28, 2023 Read
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Nov 28, 2023 Read
Forex analysis and forecast for USD/CHF for today, November 27, 2023
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Nov 27, 2023 Read
EUR/USD: ECB policy easing will give strength to the single currency
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Nov 27, 2023 Read
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