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Germany is Preparing to Increase the Budget Deficit

11/3/2022 12:47 PM

During the Asian session, the EUR/USD pair is falling against the backdrop of poor macroeconomic statistics and the growth of the US dollar, trading around 0.9780.

Yesterday, the Federal Government of Germany announced the introduction of marginal prices for gas and electricity for domestic consumers. According to Chancellor Olaf Scholz, since March 1, residents of the country will pay no more than 12 cents per kilowatt-hour of gas and no more than 40 cents per kilowatt-hour of electricity. According to the Ministry of Finance, measures to support households and small businesses will cost the industry 33.0B euros and 21.0B euros for the national budget. Thus, 54.0B euros will be directed to the implementation of the plan, which will create a deficit in the long term. As for the report on the labor market, the unemployment rate in Germany remained around 5.5%, and the number of unemployed citizens increased by 8.0K after 13.0K in September.

Meanwhile, the US Federal Reserve made another decision to raise interest rates, bringing it to 4.00% for the first time since 2007. According to officials of the regulator, further tightening of monetary policy is proceeding by the plan, but now the agency will take into account the overall cumulative effect on the economy from the measures already taken to make decisions. Over the past four months, this statement was the first clear hint from the financial authorities that the rate hikes could be slowed down.

The trading instrument is trying to return to the global downward channel.

Technical indicators have almost completely canceled the buy signal and are preparing for a reversal: fast EMAs on the Alligator indicator have approached the signal line, and the AO oscillator histogram is forming downward bars, approaching the transition level.

Resistance levels: 0.9900, 1.0080. | Support levels: 0.9770, 0.9570.

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