EUR/USD Fundamental analysis FOREX for October 13, 2022
The minutes of the FRS meeting released the day before show that the FOMC members are concerned that the regulator is not active enough in the fight against inflation.
They believe that the negative consequences of the central bank's actions are so small that there is no point in paying attention to them. All the more so as labor market statistics allow a hawkish course to be followed.
That means that the Fed is likely to raise the rate by 75 basis points for the fourth time in a row at its November 2 meeting. Consequently, EUR/USD sellers have no reason to worry.
After the minutes were released, the dollar index soared to 20-year highs. Actually, the greenback takes every opportunity for growth, and at the moment there is no alternative to the dollar in forex trading. The bad news suggest recession is coming and investors rush to invest in protective assets. The good news suggest that the Fed will continue to raise rates. Stock indices, of course, see things differently.
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The dynamics of global financial conditions
Nevertheless, investors periodically return to the theme of the Fed's dovish reversal. The most ardent are waiting for the regulator to raise rates by 50 basis points, not 75, in November, which would depress bond yields and the dollar, while the S&P 500 soars higher. But they forget that such a scenario is not good for the Central Bank itself in the first place.
The appetite for risky assets continues to decline, which is a long-term negative factor for EUR/USD. "Bulls" will try to intercept the initiative from time to time, but all their efforts are local in nature. Our forex trading strategies assume formation of sales from upward corrections or on breakdown of important support levels. Our 1, 3 and 6-month forecasts are waiting for the pair at 0.95, 0.92 and 0.90.