Friday, December 3

The euro / dollar incubates a short-term soil

The price of the euro / dollar rebounded this Thursday to 1.1320 units after having chained a six-day streak down. Market sources explained to that the pair could be developing a short-term bottom after this punishment.

Inflation data in the United States, which showed the highest price increase in three decades, triggered the dollar and accelerated the bearish rally of the euro / dollar.

After the publication of this figure, the euro / dollar began the six-day downward streak in which it lost more than 2 percent, to trade this Thursday at 1.1320 units.

Virtually all the movement is explained by the strength of the greenback, spurred in turn by the increase in yield on US bonds. Thus, the ten-year debt climbed to 1.6 percent and put more downward pressure on the euro / dollar.

Recovery in sight for the euro / dollar

The oversold in the currency pair is very high, which caused the price to rebound this Thursday. The market tested a clear level, 1.1290 units, which coincides with the 38.2 percent Fibonacci retracement.

After leaving the euro / dollar higher in this particularly sensitive area, Bloomberg analyst Vassilis Karamanis explained that the euro could consolidate levels in the coming weeks, which points to the formation of a floor.

FX Street analysts agree with this diagnosis, when they point out that the euro / dollar seems to have entered a consolidation phase this Thursday.

It is possible to think of a continuation of the rebound, but taking into account that the pair is completely at the mercy of what happens with the dollar.

If more negative news arrives from Wall Street suggesting that the Fed will change its route of withdrawing stimulus, the downward pressure on the euro / dollar could increase.

No news from the ECB

The point is, neither is excessive bullish momentum expected from the euro side. In fact, Isabel Schnabel, a member of the governing council of the European Central Bank, He said the bank’s decision to continue buying bonds was a sign that a rate hike was not imminent.

Along the same lines, the vice president of the ECB, Luis de Guindos, said that he does not expect an increase in interest rates next year. It is practically the same message that the president of the issuer, Christine Lagarde, sent a little earlier when she said that inflation will be transitory.

As long as there is no news of a more restrictive turn by the ECB in its monetary policy, the market will continue to reward the dollar in the long term, given the higher profitability it offers against the Community currency.

In the short term, the effect of the accumulated oversold could influence the gestation of the ground that technical analysts are seeing. In the long term, the structure of the euro / dollar remains bearish.

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