FOREX fundamental analysis for EUR/USD on November 24, 2022
The FOMC meeting minutes were an unpleasant surprise for the buyers of the dollar. It turns out that the majority of Committee members have long believed that a slowdown in the pace of monetary restriction would be "quite appropriate". It was enough for EUR/USD to test the resistance of 1.045.
Of course, there are those in the leadership of the regulator who are against the brake, but they are in the minority. Most are afraid of the consequences of aggressive policy and offer to analyze the efficiency of the adopted measures.
Demand for risky assets, including the euro, was also supported by the forecast of the global economy according to which the world GDP will expand by 2% in 2023. Moreover, given the economic indicators, the United States may well avoid a recession. And if an economic downturn does occur, it is unlikely to be deep and prolonged.
The warm winter, stable LNG supplies and timely filling of storage facilities have significantly reduced the risk of recession in Eurozone. This is confirmed by German business activity indexes.
For the time being the most negative moment for investors is still epidemiological situation in China. If the Celestial Empire copes with new outbreak of COVID-19, purchase of the defensive assets will be doubtful.
Of course, judging by the news, the fight against coronavirus in China may be delayed, and the U.S. and the Eurozone can fail. Nevertheless the optimism in the market remains, EUR/USD is headed towards 1.06. We keep open purchases and build them up on pullbacks.