The legend in the InstaSpot team!
Legend! You think that's bombastic rhetoric? But how should we call a man, who became the first Asian to win the junior world chess championship at 18 and who became the first Indian Grandmaster at 19? That was the start of a hard path to the World Champion title for Viswanathan Anand, the man who became a part of history of chess forever. Now one more legend in the InstaSpot team!
Borussia is one of the most titled football clubs in Germany, which has repeatedly proved to fans: the spirit of competition and leadership will certainly lead to success. Trade in the same way that sports professionals play the game: confidently and actively. Keep a "pass" from Borussia FC and be in the lead with InstaSpot!
New is the well-forgotten old. Determination was in style when central banks raised rates. Their currencies received support from it. The slowdown in inflation would seem to make central banks more cautious. They seemed to think they could sit back and relax. But by the end of 2023, determination may come back into style. Financial markets demand that the European Central Bank loosen its monetary policy as soon as possible. If ECB President Christine Lagarde and her colleagues respond, EUR/USD will take a hit.
When inflation slows down faster than expected, it is inevitable for us to wonder whether interest rates should fall faster too. The US Personal Consumption Expenditure Index has plummeted to 3%, consumer prices in the eurozone to 2.4%, and in Germany, even to 2.3%.
This is all happening against the backdrop of a barely standing eurozone economy. France's GDP unexpectedly contracted in the third quarter, and Germany was hit by the Constitutional Court's decision as it found the government's use of special funds unlawful. Now Berlin is forced to figure out how to plug the hole in the budget, which risks seriously slowing GDP in 2024-2025. It's not surprising that markets are factoring in expectations of a 125 bps deposit rate cut by the ECB next year.
It's surprising that similar forecasts are being made for the Federal Reserve. Inflation in the United States is decreasing more slowly than in the eurozone, due to significant fiscal stimuli during the pandemic, a stronger labor market, and less impact from the energy crisis. The U.S. economy looks significantly stronger than the European one. In the third quarter, it expanded by 5.2%. In the fourth, the leading indicator from the Fed Bank of Atlanta signals growth of 2.1%. This is significantly higher than the Bloomberg expert consensus estimate of 0.9%.
Bulls on EUR/USD seized the opportunity after Christopher Waller's comments about a possible rate cut if the disinflation process continues at the same pace as earlier. However, in a strong economy, the chances of such an outcome are lower than in a weak one. Moreover, the subsequent speech by New York Fed President John Williams about keeping borrowing costs at a plateau for a long time shows that not everyone agrees with this.
At the end of the day, financial conditions have not been abolished. The fact that they are getting weaker complicates the Fed's fight against inflation. Fed Chair Jerome Powell will have an excellent opportunity to corner the markets. A dip in stock markets will push EUR/USD even lower.
On the other hand, the Fed's decisions will still depend on incoming data. And reports on US employment for November are of much greater interest to investors than the FOMC officials' assumptions.
Technically, returning below the fair value at 1.0915 is a bearish sign. If buyers fail to return the pair above this level in the next few days, EUR/USD may continue to fall towards 1.08. We maintain the shorts formed from 1.094.
*এখানে পোস্ট করা মার্কেট বিশ্লেষণ আপনার সচেতনতা বৃদ্ধির জন্য প্রদান করা হয়, ট্রেড করার নির্দেশনা প্রদানের জন্য প্রদান করা হয় না।
ইন্সটাফরেক্স বিশ্লেষণমূলক পর্যালোচনাগুলো আপনাকে মার্কেট প্রবণতা সম্পর্কে পুরোপুরি সচেতন করবে! ইন্সটাফরেক্সের একজন গ্রাহক হওয়ায়, দক্ষ ট্রেডিং এর জন্য আপনাকে অনেক সেবা বিনামূল্যে প্রদান করা হয়।