FOREX Fundamental Analysis for EUR/USD on October 14, 2022
After the U.S. inflation report was released, the Dow Jones index first lost 500 points and then quickly recovered to 800. Financial markets are very sensitive to the U.S. macroeconomic statistics, but no one expected that the release would bring losses to EUR/USD sellers.
Core inflation in the United States rose from 6.3% to 6.6%, which was higher than the forecast of 6.5%. The pair fell by 100 pips and was caught by the buyers, who created a fear so that the "bears" quickly took profits in the shorts.
Nevertheless, the dollar remains the safest defensive asset and the demand for it will decline only when the world economy recovers from the bottom. Even a slowdown with rising rates (for which there is actually no reason, on the contrary) will not be enough conditions for the greenback to turn around.
Citi recommends buying the dollar, and I think the analysts are right. We do not expect a global intervention, like in 1985, and it should be said that at that time the U.S. itself participated in the operation. Now the decline of the dollar is not beneficial to the Fed. Why else would the regulator raise rates?
I think the greenback will continue to strengthen for another 6-9 months. The Fed has not finished its work, and the market is going against it again. We know where this will lead. We continue to sell EUR/USD with the nearest target at 0.95.
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