Fundamental analysis of FOREX on November 29, 2022
The central banks of the countries are interested in the strengthening of the national currencies and decrease of the dollar rate at least in order to reduce the cost of oil and gas. Christine Lagarde's active comments helped EUR/USD to test the 1.05 level, however the euro did not have enough strength for further growth.
The head of ECB doubted the slowdown of inflation in Europe and said that the policy of the European regulator is not consistent, so in addition to raising rates the Governing Council is considering other mechanisms of tightening monetary policy in order not to stimulate demand.
Investors are back to discussing the ECB rate hike of 75 basis points in December, and the currency risk has risen sharply, especially as the Fed is expected to slow the pace of monetary policy restrictions.
Large investment managers and funds also believe that the dollar has passed its peak, and forex trading on volume shows that funds continue to ramp up dollar sales.
However, the worsening of the dollar's position should hardly please the Fed, which has been working on tightening the financial conditions during the year. Already yesterday the head of the New York Fed said that efforts to fight inflation will continue until 2024. His counterpart at the St. Louis Fed, James Bullard, threatened that markets are clearly underestimating the Fed's capabilities.
I believe that soon Fed Chairman Jerome Powell will make a hawkish statement, which will be the beginning of a new wave of decline in the EUR/USD pair. If the buyers will not be able to catch at 1.0385, we will open the sales at the breakdown of the level of 1.033.
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