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The Euro is Trying to Reverse Into Corrective Growth

11/23/2022 10:23 AM

The European currency shows flat dynamics, testing the level of 1.0310 for a breakout. Traders are in no hurry to open new positions in anticipation of today's publication of the minutes of the US Federal Reserve meeting, which may clarify the prospects for the regulator's monetary policy.

At the moment, forecasts suggest that the interest rate will be raised by 50 basis points in December, but the Fed is unlikely to stop there. Representatives of the US Federal Reserve generally agree that it is premature to talk about the imminent end of the monetary policy tightening cycle. In particular, Loretta Meister and Mary Daly made "hawkish" comments the day before, also noting that the rate of the rate hike may be reduced in the future. An increase in interest rates by 50 basis points is expected in December from the European Central Bank (ECB), and unlike the US Federal Reserve, the European regulator has to act much more cautiously, due to the proximity of the region's economy to recession.

The focus of investors today will be statistics on business activity from S&P Global for November. Current forecasts suggest that the S&P Global Manufacturing PMI will decline from 47.3 points to 47.0 points, and the Services PMI may decline from 48.6 points to 48.0 points.

Also yesterday it became known that the authorities of the European Union proposed to slightly change the key provisions on limiting prices for the supply of Russian "black gold", as well as provide for a phased 45-day transition to the new rules. According to Bloomberg, it will affect oil loaded before the date of entry into force of sanctions on December 5 and unloaded before January 19. It is expected that the price ceiling will be set in the region of 40.0-60.0 dollars per barrel, but even now the initiative is causing controversy among representatives of the countries of the bloc: in particular, France is in favor of these measures, while Germany is against it. If EU leaders approve the new pricing scheme, it will come into effect from January 1, 2023.

Bollinger Bands on the daily chart show a steady increase. The price range is narrowing, reflecting the emergence of ambiguous dynamics of trading in the short term. MACD is falling, keeping a relatively strong sell signal (the histogram is below the signal line). Stochastic, which has rebounded from the level of "20", is trying to reverse upwards, signaling in favor of the development of corrective growth in the near future.

Resistance levels: 1.0350, 1.0400, 1.0450, 1.0500. | Support levels: 1.0300, 1.0253, 1.0200, 1.0150.

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