FOREX Fundamental analysis on October 6, 2022
Investors constantly criticize the Fed. At the beginning of 2022 for slowness in toughening of the monetary policy, now for excessive aggressiveness. The UN even suggests stopping the process of raising rates, as it may lead to a global recession. Market participants keep hoping for a "dovish" U-turn by the Fed, which actually strengthens EUR/USD.
FOMC members one after another say that monetary tightening should be continued. Nevertheless, derivatives on the futures market are reducing the probability of a November rate hike by 75 basis points day by day.
Atlanta Fed Governor Rafael Bostic warns that the Fed's change in outlook won't happen as quickly as the markets see it. His San Francisco colleague Mary Daley thinks rate easing won't even begin next year.
But, forex trading on the news shows that traders use every weak economic release from the U.S. to buy risky assets. Yesterday's ADP labor market report and ISM service sector activity index were the drivers for declines in equities and EUR/USD.
The dollar continues to be in demand which together with comments from FOMC members makes it impossible to change the trend. Reuters predicts that within 6 months euro will be cheaper than dollar and only then will start to grow in the direction of 1.03.
In order to change the direction of the global trend, it is necessary that the global economy develops better than the U.S. economy. This is not the case. China recorded a new outbreak of COVID-19 with all its consequences, the energy crisis is raging in Europe. Global GDP for 2023 has been cut from 3.3% to 2.3% and global trade growth has been adjusted from 3.3% to 1.0%.
The EUR/USD downtrend continues. The desire to get ahead of the Fed will bring losses for traders buying risky assets. But, much, of course, will depend on tomorrow's U.S. labor market report. The pair remains in the range of 0.985-1.000.
More about EUR/USD trading
If you are interested in EUR/USD analytics, we recommend you to visit the analytics page, where you can find the latest analytics on Forex from top traders from all over the world. These analytics will be useful both for beginners and professional traders. The Forex signals service makes it much easier for beginners to make their first steps in trading on the financial markets. The latest EUR/USD forecasts and signals contain support and resistance levels, as well as stop-loss levels.