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31.03.202411:26 Forex Analysis & Reviews: What did Jerome Powell say on Friday?

Exchange Rates 31.03.2024 analysis

The trading week concluded with perhaps the most important event, to which the market didn't even have time to react. On Friday evening, Federal Reserve Chairman Jerome Powell delivered a speech. Although he did not share any surprisingly new statements, his speech was still important enough not to be overlooked. In particular, Powell said the new US inflation data was along the lines of what the Fed wants. Recall that, according to the data, inflation in the US accelerated from 3.1% to 3.2% on an annual basis. Over the past 9 months, inflation has accelerated by 0.2% annually. Therefore, inflation is more likely rising instead of decreasing.

Undoubtedly, core inflation has been decreasing during this time, which is also quite important. Furthermore, the Producer Price Index is also decreasing, but at the same time, the slowdown in various secondary inflation indicators is not enough to bring down the core indicator. Powell took note of the report on Personal Consumption Expenditures Prices, which accelerated by 0.3%, as he said that there was no surprises in the data. In general, the pace of price growth for goods excluding food slowed to 0.3%.

Exchange Rates 31.03.2024 analysis

Powell mentioned that critics of the central bank are now divided "into equal-sized piles": those eagerly awaiting the first policy easing and those who are wary of the move. However, Powell repeated that the US central bank isn't in any rush to cut interest rates. The American economy is strong enough, so there is nothing to fear if the rate stays at its peak level slightly longer than previously expected, according to Powell.

The head of the Fed announced that the central bank intends to ensure that inflation will reach 2% in the future, and until such evidence is obtained, there will be no transition to a softer policy. At the same time, even when the easing cycle begins, one should not expect the rate to be lowered to the low levels that were held for more than 10 years. In conclusion, Powell said he doesn't see elevated risk of recession.

Wave analysis for EUR/USD:

Based on the conducted analysis of EUR/USD, I conclude that a bearish wave set is being formed. Wave 2 or b is complete, so in the near future, I expect an impulsive downward wave 3 or c to form with a significant decline in the instrument. I am considering short positions with targets near the 1.0462 mark, which corresponds to 127.2% Fibonacci.

Exchange Rates 31.03.2024 analysis

Wave analysis for GBP/USD:

The wave pattern of the GBP/USD instrument suggests a decline. I am considering selling the instrument with targets below the 1.2039 level, because I believe that wave 3 or c will start sooner or later. However, unless we can confirm that wave 2 or b ends, the instrument can still rise to the level of 1.3140, which corresponds to 100.0% Fibonacci. The construction of wave 3 or c may have already started, but the quotes haven't moved far away from the peaks, so we cannot confirm this.

Key principles of my analysis:

Wave structures should be simple and understandable. Complex structures are difficult to work with, and they often bring changes.

If you are not confident about the market's movement, it would be better not to enter it.

We cannot guarantee the direction of movement. Don't forget about Stop Loss orders.

Wave analysis can be combined with other types of analysis and trading strategies.

*El análisis de mercado publicado aquí tiene la finalidad de incrementar su conocimiento, más no darle instrucciones para realizar una operación.

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