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EURUSD: the dollar has pushed other currencies to the corners

EUR/USD, currency, EURUSD: the dollar has pushed other currencies to the corners

FOREX Fundamental analysis on September 26, 2022

The central banks, trying to support the national currencies, were powerless against the confident march of the dollar. Moreover, rate hikes of central banks only bring closer a global recession, in which the greenback will feel the best. How not to fall EUR/USD with such a fundamental background?

Jerome Powell believes that a new reality has arrived for the American economy. Whereas in the past central banks raised rates by 25 basis points and sent the markets into a spin, monetary tightening by 75 basis points is now the norm.

A dozen regulators raised rates last week. The trouble, however, is that many central banks trying to keep up with the Fed are failing to keep up with the results of monetary tightening for national economies, which could lead to unintended consequences, as the Fed is poised to raise the rate to 5% as early as 2023.

The dollar has become stronger in forex trading and is being bought as the major defensive asset. Long positions on the dollar, according to the CFTC, are opened about 8 times more than the 20-year average.

But EUR/USD has another downside driver: the Eurozone problems. Europe is expected to start winter earlier this year, which will lead to a new round of gas prices. This is a big problem not only for the people, but also for the industry of Eurobloc, which is not in the best shape according to the business activity indexes. The Euro has no reason to grow, so it is just a matter of time before the EUR/USD drops to 0.95. For now there is a technical pullback, which might continue in case the "bulls" catch up with 0.9640. Our forex trading strategy suggests to use upward corrections for new sales.

 

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EUR/USD: Non-farm Payrolls won't help the dollar
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Jun 02, 2023 Read
Forex pair EUR/USD: FOMC is in no hurry to raise the rate
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Jun 01, 2023 Read
Forex analysis and forecast for USD/JPY for today, June 1, 2023
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Jun 01, 2023 Read
EUR/USD: dollar buyers have no reason to worry
EUR/USD, currency, EUR/USD: dollar buyers have no reason to worry FOREX Fundamental Analysis for EURUSD on May 31, 2023The problem with the sovereign debt ceiling is resolved, the Fed plans to continue raising interest rates and rumors of a recession were exaggerated. At the same time, China's economy continues to disappoint investors and inflation in Spain has slowed to 2.9%, severely limiting the potential for ECB action. EURUSD, after a slight upward correction, returned to the downside.The head of the Federal Reserve Bank of Cleveland thinks there is no reason to pause in monetary easing, but there are enough arguments for it to continue. On the futures market, the probability of a rate hike in June has risen to 60%. Of course, some adjustment to the Fed's actions can be made by the US labor market report, but ING believes that the impact of Non-farm Payrolls on the dollar exchange rate will be minimal, unless the report is super screwed up.Pic. 1. Probability of Fed Funds Rate Change in June.Loretta Mester holds the same view. In May, the main reason for the pause in the rate hike cycle was the threat of default. Now that the potential threat has been leveled out, the Fed has no reason to change its positioning.Moreover, the agreement on the reduction of budget expenditures, according to the head of the Federal Reserve Bank of Cleveland, will eliminate a number of uncertainties and have a positive effect on GDP.Pic. 2. US Treasury bill yield dynamics.In China, the May Manufacturing Purchasing Managers Index unexpectedly collapsed from 49.2 to 48.8 pips and remains below the key level of 50 pips. China's economy is recovering at a different pace than analysts had forecast, which puts pressure on the single currency.The attention of the markets switches from the threat of default to the monetary policy of the central banks. In addition, investors are waiting for the report on Friday on the US labor market. On expectations EUR/USD may go down to 1.0665, which will be typical of the "sell on rumor, buy on news" strategy. Get ready to go short.
May 31, 2023 Read
Forex EUR/USD: will the pair retain its uptrend?
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May 30, 2023 Read
Forex analysis and forecast for USD/JPY for today, May 29, 2023
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May 29, 2023 Read
EUR/USD: US default is off
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May 29, 2023 Read
Forex analysis and forecast for USD/CHF for today, May 25, 2023
USD/CHF, currency, Forex analysis and forecast for USD/CHF for today, May 25, 2023 Asian session of Thursday passes with the advantage of USD/CHF buyers. The pair is growing and trying to break above the local highs of April 11 at 0.9065.The main theme for traders is the lingering problem with the U.S. debt ceiling. If American authorities do not come to a consensus, since June 1 they will not be able to pay their obligations, which means a technical default.In addition, investors are analyzing the minutes of the May meeting of the Fed, which do not rule out a possible pause in the cycle of rising rates at the June meeting. The regulator may take a pause to assess the effectiveness of measures taken to tighten financial conditions.Revised estimate of the US GDP in the first quarter as well as housing market's pending transactions statistics will be released today.Technical Analysis for USD/CHFOn the Daily the Bollinger Band indicator is pointing up, as well as the MACD indicator, which preserves the buy signal. Stochastic Oscillator is testing the 80% level for a break up and may enter the overbought area.After a break above the level of 0.9065, it is expected to open a buy with Take Profit at 0.9150. Stop-loss is set at 0.9000.Selling will be relevant if the pair will consolidate below support at 0.9030. The target is 0.8960. Stop-loss is set at 0.9065.
May 25, 2023 Read
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