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EUR USD - FUNDAMENTAL DRIVERSEUR FUNDAMENTAL OUTLOOK: WEAK BEARISH BASELINE HICP >9% saw another 75bsp hike this past week. ECB sources noted the bank is planning to discuss QT at their Dec meeting. On spread fragmentation, the bank didn’t provide any new info or clarity on how the eligibility might impact countries like Italy and Spain. Until the BTP/Bund spread breaches 2.55%, markets will have to wait and see whether TPI can make a difference. The main driver for the EUR is the economic outlook, but there are a few different conflicting drivers. Gas supply from Russia remain closed, but energy reform plans have seen EU gas prices lose ground. The war in Ukraine remains a risk, but recent victories by Ukraine has been a more positive development. POSSIBLE BULLISH SURPRISES De-escalation or cease fire in Ukraine. Stagflation risks remains, but with lots of bad news priced any materially better-than-expected data could spark some relief. Any TPI comments that convinces markets it can solve spread fragmentation issues should be supportive for the EUR. Resumption of Nord Stream gas flows or if gas storage can see Europe through winter, would ease some of the pressure. Given the EUR’s DXY weighting, better overall risk sentiment that pressures the USD should be supportive for the EUR. POSSIBLE BEARISH SURPRISES Escalation in Ukraine war that risks NATO involvement. Stagflation risks remains, even with lots of bad news priced any materially worse-than-expected data could see more pressure. If ECB fails to act on the TPI when we see big jolts higher in the BTP/Bund spread could trigger bearish reactions in the EUR. Announcements that Europe gas storage won’t make it through the winter without resumption of gas flows. Given the EUR’s DXY weighting, continued sour risk sentiment that supports the USD should be negative for the EUR. BIGGER PICTURE The fundamental outlook remains bearish with recent data pointing to a higher likelihood of a EZ recession. Current bearish drivers (geopolitics, stagflation, spread fragmentation, energy supply) outweigh the positives. Recession risks remain high and means incoming data like growth & inflation will be watched closely. For now, the focus for the EUR is on multiple fronts from energy to policy to geopolitics, which means we don’t want to be hasty with looking for new EUR trades and want a very clear reason and catalyst to trade the currency in the short-term. In the week ahead the main highlight will be the US CPI report which can have a big impact across major asset classes. USD FUNDAMENTAL OUTLOOK: BULLISH BASELINE With headline CPI above 8% and Core CPI seeing another acceleration in the SEP CPI data, the Fed is under pressure to continue hiking rates and ramping up QT. At the NOV FOMC presser, Fed Chair Powell shattered any big hopes of a pivot and warned that their SEP expectations for the terminal rate will have to be revised higher. The Fed is on a data-dependent (meeting-by-meeting) policy stance, meaning incoming growth, inflation and jobs data remains a key driver for short-term USD volatility where we expect a cyclical reaction for both the USD and US10Y (good data expected to be supportive for the USD and US yields while bad data is expected to pressure the USD and US yields). The past week was a choppy one for the USD, with upside seen after the more hawkish Fed presser, but a unexpected and punchy move lower after Friday’s mixed NFP jobs report. POSSIBLE BULLISH SURPRISES With the Fed signalling a data dependent policy stance, we expect a cyclical reaction from the USD with incoming US data. Thus, extremely good growth, inflation or jobs data is expected to trigger short-term bullish reactions in the USD. If the cyclical outlook continues to weaken, the USD’s safe haven status still matters. Any incoming catalysts that increase deep recession fears and triggers strong moves lower in risk assets & bonds can trigger safe haven flows into the USD. With a lot priced for the Fed and USD, the bar is high for hawkish Fed surprises, but any aggressive Fed speak talking up a >5.5% terminal rate can trigger further USD upside. POSSIBLE BEARISH SURPRISES With the Fed signalling a data dependent policy stance, we expect a cyclical reaction from the USD with incoming US data. Thus, extremely bad growth, inflation or jobs data is expected to trigger short-term bearish reactions in the USD. If the cyclical outlook starts to improve, the USD’s safe haven status still matters. Any incoming catalysts that decrease deep recession fears and triggers strong moves higher in risk assets & bonds can trigger safe haven outflows out of the USD. With a lot priced in for the Fed and the USD, it won’t take much to disappoint on the dovish side. Any big concerns about growth from Fed speakers could trigger outflows. BIGGER PICTURE The fundamental outlook for the USD remains bullish as long as the Fed stays aggressively hawkish and cyclical concerns put pressure on risk sentiment. The data dependent stance from the Fed means that short-term data surprises can pull the USD either way and would be our preferred way of trading the Dollar right now. The week ahead will give us the most recent US CPI data which will be the biggest focus for markets, and we also have UoM Consumer Sentiment to watch. The price action in the USD following Friday’s NFP was interesting, but not something to use with any real conviction to trade into the week ahead. Waiting for CPI and UoM Consumer Sentiment seems like the safest way to approach the USD in the week ahead.
by thunderpips
3
EUR USD - FUNDAMENTAL DRIVERSEUR FUNDAMENTAL OUTLOOK: WEAK BEARISH BASELINE HICP >9% saw another 75bsp hike this past week. ECB sources noted the bank is planning to discuss QT at their Dec meeting. On spread fragmentation, the bank didn’t provide any new info or clarity on how the eligibility might impact countries like Italy and Spain. Until the BTP/ Bund spread breaches 2.55%, markets will have to wait and see whether TPI can make a difference. The main driver for the EUR is the economic outlook, but there are a few different conflicting drivers. Gas supply from Russia remain closed, but energy reform plans have seen EU gas prices lose ground. The war in Ukraine remains a risk, but recent victories by Ukraine has been a more positive development. POSSIBLE BULLISH SURPRISES De-escalation or cease fire in Ukraine. Stagflation risks remains, but with lots of bad news priced any materially better-than-expected data could spark some relief. Any TPI comments that convinces markets it can solve spread fragmentation issues should be supportive for the EUR. Resumption of Nord Stream gas flows or if gas storage can see Europe through winter, would ease some of the pressure. Given the EUR’s DXY weighting, better overall risk sentiment that pressures the USD should be supportive for the EUR. POSSIBLE BEARISH SURPRISES Escalation in Ukraine war that risks NATO involvement. Stagflation risks remains, even with lots of bad news priced any materially worse-than-expected data could see more pressure. If ECB fails to act on the TPI when we see big jolts higher in the BTP/ Bund spread could trigger bearish reactions in the EUR. Announcements that Europe gas storage won’t make it through the winter without resumption of gas flows. Given the EUR’s DXY weighting, continued sour risk sentiment that supports the USD should be negative for the EUR. BIGGER PICTURE The fundamental outlook remains bearish with recent data pointing to a higher likelihood of a EZ recession. Current bearish drivers (geopolitics, stagflation, spread fragmentation, energy supply) outweigh the positives. Recession risks remain high and means incoming data like growth & inflation will be watched closely. For now, the focus for the EUR is on multiple fronts from energy to policy to geopolitics, which means we don’t want to be hasty with looking for new EUR trades and want a very clear reason and catalyst to trade the currency in the short-term. USD FUNDAMENTAL OUTLOOK: BULLISH BASELINE With headline CPI above 8% and Core CPI seeing another acceleration in the SEP CPI data, the Fed is under pressure to continue hiking rates and ramping up QT. The Fed is on a data-dependent (meeting-by-meeting) policy stance, meaning incoming growth, inflation and jobs data remains a key driver for short-term USD volatility where we expect a cyclical reaction with incoming data for both the USD and US10Y (good data expected to be supportive for the USD while bad data is expected to pressure the USD). POSSIBLE BULLISH SURPRISES With the Fed signalling a data dependent policy stance, we expect a cyclical reaction from the USD with incoming US data. Thus, extremely good growth, inflation or jobs data is expected to trigger short-term bullish reactions in the USD. If the cyclical outlook continues to weaken, the USD’s safe haven status still matters. Any incoming catalysts that increase deep recession fears and triggers strong moves lower in risk assets & bonds can trigger safe haven flows into the USD. With a lot priced for the Fed and USD, the bar is high for hawkish Fed surprises, but any aggressive Fed speak talking up a >5.0% terminal rate can trigger further USD upside. POSSIBLE BEARISH SURPRISES With the Fed signalling a data dependent policy stance, we expect a cyclical reaction from the USD with incoming US data. Thus, extremely bad growth, inflation or jobs data is expected to trigger short-term bearish reactions in the USD. If the cyclical outlook starts to improve, the USD’s safe haven status still matters. Any incoming catalysts that decrease deep recession fears and triggers strong moves higher in risk assets & bonds can trigger safe haven outflows out of the USD. With a lot priced in for the Fed and the USD, it won’t take much to disappoint on the dovish side. Any big concerns about growth from Fed speakers could trigger outflows. BIGGER PICTURE The fundamental outlook for the USD remains bullish as long as the Fed stays hawkish and cyclical concerns put pressure on risk sentiment. The data dependent stance from the Fed means that short-term data surprises can pull the USD either way and would be our preferred way of trading the Dollar right now. For the econ data our expectation is for a cyclical reaction where very good data is expected to support the USD and very bad data expected to pressure the USD.
by thunderpips
2
EUR USD - FUNDAMENTAL DRIVERSEUR FUNDAMENTAL OUTLOOK: WEAK BEARISH BASELINE HICP >9% saw another 75bsp hike this past week. ECB sources noted the bank is planning to discuss QT at their Dec meeting. On spread fragmentation, the bank didn’t provide any new info or clarity on how the eligibility might impact countries like Italy and Spain. Until the BTP/ Bund spread breaches 2.55%, markets will have to wait and see whether TPI can make a difference. The main driver for the EUR is the economic outlook, but there are a few different conflicting drivers. Gas supply from Russia remain closed, but energy reform plans have seen EU gas prices lose ground. The war in Ukraine remains a risk, but recent victories by Ukraine has been a more positive development. POSSIBLE BULLISH SURPRISES De-escalation or cease fire in Ukraine. Stagflation risks remains, but with lots of bad news priced any materially better-than-expected data could spark some relief. Any TPI comments that convinces markets it can solve spread fragmentation issues should be supportive for the EUR. Resumption of Nord Stream gas flows or if gas storage can see Europe through winter, would ease some of the pressure. Given the EUR’s DXY weighting, better overall risk sentiment that pressures the USD should be supportive for the EUR. POSSIBLE BEARISH SURPRISES Escalation in Ukraine war that risks NATO involvement. Stagflation risks remains, even with lots of bad news priced any materially worse-than-expected data could see more pressure. If ECB fails to act on the TPI when we see big jolts higher in the BTP/ Bund spread could trigger bearish reactions in the EUR. Announcements that Europe gas storage won’t make it through the winter without resumption of gas flows. Given the EUR’s DXY weighting, continued sour risk sentiment that supports the USD should be negative for the EUR. BIGGER PICTURE The fundamental outlook remains bearish with recent data pointing to a higher likelihood of a EZ recession. Current bearish drivers (geopolitics, stagflation, spread fragmentation, energy supply) outweigh the positives. Recession risks remain high and means incoming data like growth & inflation will be watched closely. For now, the focus for the EUR is on multiple fronts from energy to policy to geopolitics, which means we don’t want to be hasty with looking for new EUR trades and want a very clear reason and catalyst to trade the currency in the short-term. USD FUNDAMENTAL OUTLOOK: BULLISH BASELINE With headline CPI above 8% and Core CPI seeing another acceleration in the SEP CPI data, the Fed is under pressure to continue hiking rates and ramping up QT. The Fed is on a data-dependent (meeting-by-meeting) policy stance, meaning incoming growth, inflation and jobs data remains a key driver for short-term USD volatility where we expect a cyclical reaction with incoming data for both the USD and US10Y (good data expected to be supportive for the USD while bad data is expected to pressure the USD). POSSIBLE BULLISH SURPRISES With the Fed signalling a data dependent policy stance, we expect a cyclical reaction from the USD with incoming US data. Thus, extremely good growth, inflation or jobs data is expected to trigger short-term bullish reactions in the USD. If the cyclical outlook continues to weaken, the USD’s safe haven status still matters. Any incoming catalysts that increase deep recession fears and triggers strong moves lower in risk assets & bonds can trigger safe haven flows into the USD. With a lot priced for the Fed and USD, the bar is high for hawkish Fed surprises, but any aggressive Fed speak talking up a >5.0% terminal rate can trigger further USD upside. POSSIBLE BEARISH SURPRISES With the Fed signalling a data dependent policy stance, we expect a cyclical reaction from the USD with incoming US data. Thus, extremely bad growth, inflation or jobs data is expected to trigger short-term bearish reactions in the USD. If the cyclical outlook starts to improve, the USD’s safe haven status still matters. Any incoming catalysts that decrease deep recession fears and triggers strong moves higher in risk assets & bonds can trigger safe haven outflows out of the USD. With a lot priced in for the Fed and the USD, it won’t take much to disappoint on the dovish side. Any big concerns about growth from Fed speakers could trigger outflows. BIGGER PICTURE The fundamental outlook for the USD remains bullish as long as the Fed stays hawkish and cyclical concerns put pressure on risk sentiment. The data dependent stance from the Fed means that short-term data surprises can pull the USD either way and would be our preferred way of trading the Dollar right now. For the econ data our expectation is for a cyclical reaction where very good data is expected to support the USD and very bad data expected to pressure the USD.
by thunderpips
EUR USD - FUNDAMENTAL DRIVERSEUR FUNDAMENTAL OUTLOOK: WEAK BEARISH BASELINE HICP >9% saw another 75bsp hike this past week. ECB sources noted the bank is planning to discuss QT at their Dec meeting. On spread fragmentation, the bank didn’t provide any new info or clarity on how the eligibility might impact countries like Italy and Spain. Until the BTP/ Bund spread breaches 2.55%, markets will have to wait and see whether TPI can make a difference. The main driver for the EUR is the economic outlook, but there are a few different conflicting drivers. Gas supply from Russia remain closed, but energy reform plans have seen EU gas prices lose ground. The war in Ukraine remains a risk, but recent victories by Ukraine has been a more positive development. POSSIBLE BULLISH SURPRISES De-escalation or cease fire in Ukraine. Stagflation risks remains, but with lots of bad news priced any materially better-than-expected data could spark some relief. Any TPI comments that convinces markets it can solve spread fragmentation issues should be supportive for the EUR. Resumption of Nord Stream gas flows or if gas storage can see Europe through winter, would ease some of the pressure. Given the EUR’s DXY weighting, better overall risk sentiment that pressures the USD should be supportive for the EUR. POSSIBLE BEARISH SURPRISES Escalation in Ukraine war that risks NATO involvement. Stagflation risks remains, even with lots of bad news priced any materially worse-than-expected data could see more pressure. If ECB fails to act on the TPI when we see big jolts higher in the BTP/ Bund spread could trigger bearish reactions in the EUR. Announcements that Europe gas storage won’t make it through the winter without resumption of gas flows. Given the EUR’s DXY weighting, continued sour risk sentiment that supports the USD should be negative for the EUR. BIGGER PICTURE The fundamental outlook remains bearish with recent data pointing to a higher likelihood of a EZ recession. Current bearish drivers (geopolitics, stagflation, spread fragmentation, energy supply) outweigh the positives. Recession risks remain high and means incoming data like growth & inflation will be watched closely. For now, the focus for the EUR is on multiple fronts from energy to policy to geopolitics, which means we don’t want to be hasty with looking for new EUR trades and want a very clear reason and catalyst to trade the currency in the short-term. USD FUNDAMENTAL OUTLOOK: BULLISH BASELINE With headline CPI above 8% and Core CPI seeing another acceleration in the SEP CPI data, the Fed is under pressure to continue hiking rates and ramping up QT. Markets expect another 75bsp hike in NOV and currently prices the terminal rate at 4.89%. The Fed is on a data-dependent (meeting-by-meeting) policy stance, meaning incoming growth, inflation and jobs data remains a key driver for short-term USD volatility where we expect a cyclical reaction with incoming data for both the USD and US10Y (good data expected to be supportive for the USD while bad data is expected to pressure the USD). POSSIBLE BULLISH SURPRISES With the Fed signalling a data dependent policy stance, we expect a cyclical reaction from the USD with incoming US data. Thus, extremely good growth, inflation or jobs data is expected to trigger short-term bullish reactions in the USD. If the cyclical outlook continues to weaken, the USD’s safe haven status still matters. Any incoming catalysts that increase deep recession fears and triggers strong moves lower in risk assets & bonds can trigger safe haven flows into the USD. With a lot priced for the Fed and USD, the bar is high for hawkish Fed surprises, but any aggressive Fed speak talking up a >5.0% terminal rate can trigger further USD upside. POSSIBLE BEARISH SURPRISES With the Fed signalling a data dependent policy stance, we expect a cyclical reaction from the USD with incoming US data. Thus, extremely bad growth, inflation or jobs data is expected to trigger short-term bearish reactions in the USD. If the cyclical outlook starts to improve, the USD’s safe haven status still matters. Any incoming catalysts that decrease deep recession fears and triggers strong moves higher in risk assets & bonds can trigger safe haven outflows out of the USD. With a lot priced in for the Fed and the USD, it won’t take much to disappoint on the dovish side. Any big concerns about growth from Fed speakers could trigger outflows. BIGGER PICTURE The fundamental outlook for the USD remains bullish as long as the Fed stays hawkish and cyclical concerns put pressure on risk sentiment. The data dependent stance from the Fed means that short-term data surprises can pull the USD either way and would be our preferred way of trading the Dollar right now. We have a very excited economic calendar for the US in the week ahead, with lots of important economic data and the FOMC meeting. For the econ data our expectation is for a cyclical reaction where very good data is expected to support the USD and very bad data expected to pressure the USD.
by thunderpips
2
EUR USD - FUNDAMENTAL DRIVERSEUR FUNDAMENTAL OUTLOOK: WEAK BEARISH BASELINE HICP >9% saw another 75bsp hike this past week. ECB sources noted the bank is planning to discuss QT at their Dec meeting. On spread fragmentation, the bank didn’t provide any new info or clarity on how the eligibility might impact countries like Italy and Spain. Until the BTP/ Bund spread breaches 2.55%, markets will have to wait and see whether TPI can make a difference. The main driver for the EUR is the economic outlook, but there are a few different conflicting drivers. Gas supply from Russia remain closed, but energy reform plans have seen EU gas prices lose ground. The war in Ukraine remains a risk, but recent victories by Ukraine has been a more positive development. POSSIBLE BULLISH SURPRISES De-escalation or cease fire in Ukraine. Stagflation risks remains, but with lots of bad news priced any materially better-than-expected data could spark some relief. Any TPI comments that convinces markets it can solve spread fragmentation issues should be supportive for the EUR. Resumption of Nord Stream gas flows or if gas storage can see Europe through winter, would ease some of the pressure. Given the EUR’s DXY weighting, better overall risk sentiment that pressures the USD should be supportive for the EUR. POSSIBLE BEARISH SURPRISES Escalation in Ukraine war that risks NATO involvement. Stagflation risks remains, even with lots of bad news priced any materially worse-than-expected data could see more pressure. If ECB fails to act on the TPI when we see big jolts higher in the BTP/ Bund spread could trigger bearish reactions in the EUR. Announcements that Europe gas storage won’t make it through the winter without resumption of gas flows. Given the EUR’s DXY weighting, continued sour risk sentiment that supports the USD should be negative for the EUR. BIGGER PICTURE The fundamental outlook remains bearish with recent data pointing to a higher likelihood of a EZ recession. Current bearish drivers (geopolitics, stagflation, spread fragmentation, energy supply) outweigh the positives. Recession risks remain high and means incoming data like growth & inflation will be watched closely. For now, the focus for the EUR is on multiple fronts from energy to policy to geopolitics, which means we don’t want to be hasty with looking for new EUR trades and want a very clear reason and catalyst to trade the currency in the short-term. USD FUNDAMENTAL OUTLOOK: BULLISH BASELINE With headline CPI above 8% and Core CPI seeing another acceleration in the SEP CPI data, the Fed is under pressure to continue hiking rates and ramping up QT. Markets expect another 75bsp hike in NOV and currently prices the terminal rate at 4.89%. The Fed is on a data-dependent (meeting-by-meeting) policy stance, meaning incoming growth, inflation and jobs data remains a key driver for short-term USD volatility where we expect a cyclical reaction with incoming data for both the USD and US10Y (good data expected to be supportive for the USD while bad data is expected to pressure the USD). Our expectation for a softer USD this past week played to our advantage with a punchy move lower in the Dollar. The week ahead is filled with lots of US economic data and the FOMC policy decision which will all be important drivers for the USD. POSSIBLE BULLISH SURPRISES With the Fed signalling a data dependent policy stance, we expect a cyclical reaction from the USD with incoming US data. Thus, extremely good growth, inflation or jobs data is expected to trigger short-term bullish reactions in the USD. If the cyclical outlook continues to weaken, the USD’s safe haven status still matters. Any incoming catalysts that increase deep recession fears and triggers strong moves lower in risk assets & bonds can trigger safe haven flows into the USD. With a lot priced for the Fed and USD, the bar is high for hawkish Fed surprises, but any aggressive Fed speak talking up a >5.0% terminal rate can trigger further USD upside. POSSIBLE BEARISH SURPRISES With the Fed signalling a data dependent policy stance, we expect a cyclical reaction from the USD with incoming US data. Thus, extremely bad growth, inflation or jobs data is expected to trigger short-term bearish reactions in the USD. If the cyclical outlook starts to improve, the USD’s safe haven status still matters. Any incoming catalysts that decrease deep recession fears and triggers strong moves higher in risk assets & bonds can trigger safe haven outflows out of the USD. With a lot priced in for the Fed and the USD, it won’t take much to disappoint on the dovish side. Any big concerns about growth from Fed speakers could trigger outflows. BIGGER PICTURE The fundamental outlook for the USD remains bullish as long as the Fed stays hawkish and cyclical concerns put pressure on risk sentiment. The data dependent stance from the Fed means that short-term data surprises can pull the USD either way and would be our preferred way of trading the Dollar right now. We have a very excited economic calendar for the US in the week ahead, with lots of important economic data and the FOMC meeting. For the econ data our expectation is for a cyclical reaction where very good data is expected to support the USD and very bad data expected to pressure the USD. As for the Fed, the main focus will be on whether the FOMC confirms a downshift in the pace and size of hikes.
by thunderpips
3
EUR USD - FUNDAMENTAL DRIVERSEUR FUNDAMENTAL OUTLOOK: WEAK BEARISH BASELINE HICP >9% saw another 75bsp hike this past week. ECB sources noted the bank is planning to discuss QT at their Dec meeting. On spread fragmentation, the bank didn’t provide any new info or clarity on how the eligibility might impact countries like Italy and Spain. Until the BTP/ Bund spread breaches 2.55%, markets will have to wait and see whether TPI can make a difference. The main driver for the EUR is the economic outlook, but there are a few different conflicting drivers. Gas supply from Russia remain closed, but energy reform plans have seen EU gas prices lose ground. The war in Ukraine remains a risk, but recent victories by Ukraine has been a more positive development. POSSIBLE BULLISH SURPRISES De-escalation or cease fire in Ukraine. Stagflation risks remains, but with lots of bad news priced any materially better-than-expected data could spark some relief. Any TPI comments that convinces markets it can solve spread fragmentation issues should be supportive for the EUR. Resumption of Nord Stream gas flows or if gas storage can see Europe through winter, would ease some of the pressure. Given the EUR’s DXY weighting, better overall risk sentiment that pressures the USD should be supportive for the EUR. POSSIBLE BEARISH SURPRISES Escalation in Ukraine war that risks NATO involvement. Stagflation risks remains, even with lots of bad news priced any materially worse-than-expected data could see more pressure. If ECB fails to act on the TPI when we see big jolts higher in the BTP/ Bund spread could trigger bearish reactions in the EUR. Announcements that Europe gas storage won’t make it through the winter without resumption of gas flows. Given the EUR’s DXY weighting, continued sour risk sentiment that supports the USD should be negative for the EUR. BIGGER PICTURE The fundamental outlook remains bearish with recent data pointing to a higher likelihood of a EZ recession. Current bearish drivers (geopolitics, stagflation, spread fragmentation, energy supply) outweigh the positives. Recession risks remain high and means incoming data like growth & inflation will be watched closely. For now, the focus for the EUR is on multiple fronts from energy to policy to geopolitics, which means we don’t want to be hasty with looking for new EUR trades and want a very clear reason and catalyst to trade the currency in the short-term. USD FUNDAMENTAL OUTLOOK: BULLISH BASELINE With headline CPI above 8% and Core CPI seeing another acceleration in the SEP CPI data, the Fed is under pressure to continue hiking rates and ramping up QT. Markets expect another 75bsp hike in NOV and currently prices the terminal rate at 4.89%. The Fed is on a data-dependent (meeting-by-meeting) policy stance, meaning incoming growth, inflation and jobs data remains a key driver for short-term USD volatility where we expect a cyclical reaction with incoming data for both the USD and US10Y (good data expected to be supportive for the USD while bad data is expected to pressure the USD). Our expectation for a softer USD this past week played to our advantage with a punchy move lower in the Dollar. The week ahead is filled with lots of US economic data and the FOMC policy decision which will all be important drivers for the USD. POSSIBLE BULLISH SURPRISES With the Fed signalling a data dependent policy stance, we expect a cyclical reaction from the USD with incoming US data. Thus, extremely good growth, inflation or jobs data is expected to trigger short-term bullish reactions in the USD. If the cyclical outlook continues to weaken, the USD’s safe haven status still matters. Any incoming catalysts that increase deep recession fears and triggers strong moves lower in risk assets & bonds can trigger safe haven flows into the USD. With a lot priced for the Fed and USD, the bar is high for hawkish Fed surprises, but any aggressive Fed speak talking up a >5.0% terminal rate can trigger further USD upside. POSSIBLE BEARISH SURPRISES With the Fed signalling a data dependent policy stance, we expect a cyclical reaction from the USD with incoming US data. Thus, extremely bad growth, inflation or jobs data is expected to trigger short-term bearish reactions in the USD. If the cyclical outlook starts to improve, the USD’s safe haven status still matters. Any incoming catalysts that decrease deep recession fears and triggers strong moves higher in risk assets & bonds can trigger safe haven outflows out of the USD. With a lot priced in for the Fed and the USD, it won’t take much to disappoint on the dovish side. Any big concerns about growth from Fed speakers could trigger outflows. BIGGER PICTURE The fundamental outlook for the USD remains bullish as long as the Fed stays hawkish and cyclical concerns put pressure on risk sentiment. The data dependent stance from the Fed means that short-term data surprises can pull the USD either way and would be our preferred way of trading the Dollar right now. We have a very excited economic calendar for the US in the week ahead, with lots of important economic data and the FOMC meeting. For the econ data our expectation is for a cyclical reaction where very good data is expected to support the USD and very bad data expected to pressure the USD. As for the Fed, the main focus will be on whether the FOMC confirms a downshift in the pace and size of hikes.
by thunderpips
4
EUR USD - FUNDAMENTAL DRIVERSEUR FUNDAMENTAL OUTLOOK: WEAK BEARISH BASELINE HICP >9% saw another 75bsp hike this past week. ECB sources noted the bank is planning to discuss QT at their Dec meeting. On spread fragmentation, the bank didn’t provide any new info or clarity on how the eligibility might impact countries like Italy and Spain. Until the BTP/ Bund spread breaches 2.55%, markets will have to wait and see whether TPI can make a difference. The main driver for the EUR is the economic outlook, but there are a few different conflicting drivers. Gas supply from Russia remain closed, but energy reform plans have seen EU gas prices lose ground. The war in Ukraine remains a risk, but recent victories by Ukraine has been a more positive development. POSSIBLE BULLISH SURPRISES De-escalation or cease fire in Ukraine. Stagflation risks remains, but with lots of bad news priced any materially better-than-expected data could spark some relief. Any TPI comments that convinces markets it can solve spread fragmentation issues should be supportive for the EUR. Resumption of Nord Stream gas flows or if gas storage can see Europe through winter, would ease some of the pressure. Given the EUR’s DXY weighting, better overall risk sentiment that pressures the USD should be supportive for the EUR. POSSIBLE BEARISH SURPRISES Escalation in Ukraine war that risks NATO involvement. Stagflation risks remains, even with lots of bad news priced any materially worse-than-expected data could see more pressure. If ECB fails to act on the TPI when we see big jolts higher in the BTP/ Bund spread could trigger bearish reactions in the EUR. Announcements that Europe gas storage won’t make it through the winter without resumption of gas flows. Given the EUR’s DXY weighting, continued sour risk sentiment that supports the USD should be negative for the EUR. BIGGER PICTURE The fundamental outlook remains bearish with recent data pointing to a higher likelihood of a EZ recession. Current bearish drivers (geopolitics, stagflation, spread fragmentation, energy supply) outweigh the positives. Recession risks remain high and means incoming data like growth & inflation will be watched closely. For now, the focus for the EUR is on multiple fronts from energy to policy to geopolitics, which means we don’t want to be hasty with looking for new EUR trades and want a very clear reason and catalyst to trade the currency in the short-term. USD FUNDAMENTAL OUTLOOK: BULLISH BASELINE With headline CPI above 8% and Core CPI seeing another acceleration in the SEP CPI data, the Fed is under pressure to continue hiking rates and ramping up QT. Markets expect another 75bsp hike in NOV and currently prices the terminal rate at 4.89%. The Fed is on a data-dependent (meeting-by-meeting) policy stance, meaning incoming growth, inflation and jobs data remains a key driver for short-term USD volatility where we expect a cyclical reaction with incoming data for both the USD and US10Y (good data expected to be supportive for the USD while bad data is expected to pressure the USD). Our expectation for a softer USD this past week played to our advantage with a punchy move lower in the Dollar. The week ahead is filled with lots of US economic data and the FOMC policy decision which will all be important drivers for the USD. POSSIBLE BULLISH SURPRISES With the Fed signalling a data dependent policy stance, we expect a cyclical reaction from the USD with incoming US data. Thus, extremely good growth, inflation or jobs data is expected to trigger short-term bullish reactions in the USD. If the cyclical outlook continues to weaken, the USD’s safe haven status still matters. Any incoming catalysts that increase deep recession fears and triggers strong moves lower in risk assets & bonds can trigger safe haven flows into the USD. With a lot priced for the Fed and USD, the bar is high for hawkish Fed surprises, but any aggressive Fed speak talking up a >5.0% terminal rate can trigger further USD upside. POSSIBLE BEARISH SURPRISES With the Fed signalling a data dependent policy stance, we expect a cyclical reaction from the USD with incoming US data. Thus, extremely bad growth, inflation or jobs data is expected to trigger short-term bearish reactions in the USD. If the cyclical outlook starts to improve, the USD’s safe haven status still matters. Any incoming catalysts that decrease deep recession fears and triggers strong moves higher in risk assets & bonds can trigger safe haven outflows out of the USD. With a lot priced in for the Fed and the USD, it won’t take much to disappoint on the dovish side. Any big concerns about growth from Fed speakers could trigger outflows. BIGGER PICTURE The fundamental outlook for the USD remains bullish as long as the Fed stays hawkish and cyclical concerns put pressure on risk sentiment. The data dependent stance from the Fed means that short-term data surprises can pull the USD either way and would be our preferred way of trading the Dollar right now. We have a very excited economic calendar for the US in the week ahead, with lots of important economic data and the FOMC meeting. For the econ data our expectation is for a cyclical reaction where very good data is expected to support the USD and very bad data expected to pressure the USD. As for the Fed, the main focus will be on whether the FOMC confirms a downshift in the pace and size of hikes.
by thunderpips
4
EURUSD - The FOMC meeting will weigh on the euroIn our last update on the EURUSD, we noted that the prospect of a rate hike by the European Central bank would temporarily push the euro higher. In addition to that, we stated that this period would likely last until the next FOMC meeting between 1st and 2nd November 2022. With the FED expected to raise interest rates by 75 basis points, we believe it will negatively affect the euro and reinforce the dollar's dominance against all other currencies. Therefore, we remain bearish on the EURUSD for the short-term. Please feel free to express your ideas and thoughts in the comment section. DISCLAIMER: This analysis is not intended to encourage any buying or selling of any particular securities. Furthermore, it should not be a basis for taking any trade action by an individual investor. Therefore, your own due diligence is highly advised before entering a trade.
Short
by Tradersweekly
12
EUR USD - FUNDAMENTAL DRIVERSEUR FUNDAMENTAL OUTLOOK: WEAK BEARISH BASELINE HICP >9% saw another 75bsp hike this past week. ECB sources noted the bank is planning to discuss QT at their Dec meeting. On spread fragmentation, the bank didn’t provide any new info or clarity on how the eligibility might impact countries like Italy and Spain. Until the BTP/ Bund spread breaches 2.55%, markets will have to wait and see whether TPI can make a difference. The main driver for the EUR is the economic outlook, but there are a few different conflicting drivers. Gas supply from Russia remain closed, but energy reform plans have seen EU gas prices lose ground. The war in Ukraine remains a risk, but recent victories by Ukraine has been a more positive development. POSSIBLE BULLISH SURPRISES De-escalation or cease fire in Ukraine. Stagflation risks remains, but with lots of bad news priced any materially better-than-expected data could spark some relief. Any TPI comments that convinces markets it can solve spread fragmentation issues should be supportive for the EUR. Resumption of Nord Stream gas flows or if gas storage can see Europe through winter, would ease some of the pressure. Given the EUR’s DXY weighting, better overall risk sentiment that pressures the USD should be supportive for the EUR. POSSIBLE BEARISH SURPRISES Escalation in Ukraine war that risks NATO involvement. Stagflation risks remains, even with lots of bad news priced any materially worse-than-expected data could see more pressure. If ECB fails to act on the TPI when we see big jolts higher in the BTP/ Bund spread could trigger bearish reactions in the EUR. Announcements that Europe gas storage won’t make it through the winter without resumption of gas flows. Given the EUR’s DXY weighting, continued sour risk sentiment that supports the USD should be negative for the EUR. BIGGER PICTURE The fundamental outlook remains bearish with recent data pointing to a higher likelihood of a EZ recession. Current bearish drivers (geopolitics, stagflation, spread fragmentation, energy supply) outweigh the positives. Recession risks remain high and means incoming data like growth & inflation will be watched closely. For now, the focus for the EUR is on multiple fronts from energy to policy to geopolitics, which means we don’t want to be hasty with looking for new EUR trades and want a very clear reason and catalyst to trade the currency in the short-term. USD FUNDAMENTAL OUTLOOK: BULLISH BASELINE With headline CPI above 8% and Core CPI seeing another acceleration in the SEP CPI data, the Fed is under pressure to continue hiking rates and ramping up QT. Markets expect another 75bsp hike in NOV and currently prices the terminal rate at 4.89%. The Fed is on a data-dependent (meeting-by-meeting) policy stance, meaning incoming growth, inflation and jobs data remains a key driver for short-term USD volatility where we expect a cyclical reaction with incoming data for both the USD and US10Y (good data expected to be supportive for the USD while bad data is expected to pressure the USD). Our expectation for a softer USD this past week played to our advantage with a punchy move lower in the Dollar. The week ahead is filled with lots of US economic data and the FOMC policy decision which will all be important drivers for the USD. POSSIBLE BULLISH SURPRISES With the Fed signalling a data dependent policy stance, we expect a cyclical reaction from the USD with incoming US data. Thus, extremely good growth, inflation or jobs data is expected to trigger short-term bullish reactions in the USD. If the cyclical outlook continues to weaken, the USD’s safe haven status still matters. Any incoming catalysts that increase deep recession fears and triggers strong moves lower in risk assets & bonds can trigger safe haven flows into the USD. With a lot priced for the Fed and USD, the bar is high for hawkish Fed surprises, but any aggressive Fed speak talking up a >5.0% terminal rate can trigger further USD upside. POSSIBLE BEARISH SURPRISES With the Fed signalling a data dependent policy stance, we expect a cyclical reaction from the USD with incoming US data. Thus, extremely bad growth, inflation or jobs data is expected to trigger short-term bearish reactions in the USD. If the cyclical outlook starts to improve, the USD’s safe haven status still matters. Any incoming catalysts that decrease deep recession fears and triggers strong moves higher in risk assets & bonds can trigger safe haven outflows out of the USD. With a lot priced in for the Fed and the USD, it won’t take much to disappoint on the dovish side. Any big concerns about growth from Fed speakers could trigger outflows. BIGGER PICTURE The fundamental outlook for the USD remains bullish as long as the Fed stays hawkish and cyclical concerns put pressure on risk sentiment. The data dependent stance from the Fed means that short-term data surprises can pull the USD either way and would be our preferred way of trading the Dollar right now. We have a very excited economic calendar for the US in the week ahead, with lots of important economic data and the FOMC meeting. For the econ data our expectation is for a cyclical reaction where very good data is expected to support the USD and very bad data expected to pressure the USD. As for the Fed, the main focus will be on whether the FOMC confirms a downshift in the pace and size of hikes.
by thunderpips
9
EUR USD - FUNDAMENTAL DRIVERSEUR FUNDAMENTAL OUTLOOK: WEAK BEARISH BASELINE HICP >9% saw another 75bsp hike this past week. ECB sources noted the bank is planning to discuss QT at their Dec meeting. On spread fragmentation, the bank didn’t provide any new info or clarity on how the eligibility might impact countries like Italy and Spain. Until the BTP/ Bund spread breaches 2.55%, markets will have to wait and see whether TPI can make a difference. The main driver for the EUR is the economic outlook, but there are a few different conflicting drivers. Gas supply from Russia remain closed, but energy reform plans have seen EU gas prices lose ground. The war in Ukraine remains a risk, but recent victories by Ukraine has been a more positive development. POSSIBLE BULLISH SURPRISES De-escalation or cease fire in Ukraine. Stagflation risks remains, but with lots of bad news priced any materially better-than-expected data could spark some relief. Any TPI comments that convinces markets it can solve spread fragmentation issues should be supportive for the EUR. Resumption of Nord Stream gas flows or if gas storage can see Europe through winter, would ease some of the pressure. Given the EUR’s DXY weighting, better overall risk sentiment that pressures the USD should be supportive for the EUR. POSSIBLE BEARISH SURPRISES Escalation in Ukraine war that risks NATO involvement. Stagflation risks remains, even with lots of bad news priced any materially worse-than-expected data could see more pressure. If ECB fails to act on the TPI when we see big jolts higher in the BTP/ Bund spread could trigger bearish reactions in the EUR. Announcements that Europe gas storage won’t make it through the winter without resumption of gas flows. Given the EUR’s DXY weighting, continued sour risk sentiment that supports the USD should be negative for the EUR. BIGGER PICTURE The fundamental outlook remains bearish with recent data pointing to a higher likelihood of a EZ recession. Current bearish drivers (geopolitics, stagflation, spread fragmentation, energy supply) outweigh the positives. Recession risks remain high and means incoming data like growth & inflation will be watched closely. For now, the focus for the EUR is on multiple fronts from energy to policy to geopolitics, which means we don’t want to be hasty with looking for new EUR trades and want a very clear reason and catalyst to trade the currency in the short-term. USD FUNDAMENTAL OUTLOOK: BULLISH BASELINE With headline CPI above 8% and Core CPI seeing another acceleration in the SEP CPI data, the Fed is under pressure to continue hiking rates and ramping up QT. Markets expect another 75bsp hike in NOV and currently prices the terminal rate at 4.89%. The Fed is on a data-dependent (meeting-by-meeting) policy stance, meaning incoming growth, inflation and jobs data remains a key driver for short-term USD volatility where we expect a cyclical reaction with incoming data for both the USD and US10Y (good data expected to be supportive for the USD while bad data is expected to pressure the USD). Our expectation for a softer USD this past week played to our advantage with a punchy move lower in the Dollar. The week ahead is filled with lots of US economic data and the FOMC policy decision which will all be important drivers for the USD. POSSIBLE BULLISH SURPRISES With the Fed signalling a data dependent policy stance, we expect a cyclical reaction from the USD with incoming US data. Thus, extremely good growth, inflation or jobs data is expected to trigger short-term bullish reactions in the USD. If the cyclical outlook continues to weaken, the USD’s safe haven status still matters. Any incoming catalysts that increase deep recession fears and triggers strong moves lower in risk assets & bonds can trigger safe haven flows into the USD. With a lot priced for the Fed and USD, the bar is high for hawkish Fed surprises, but any aggressive Fed speak talking up a >5.0% terminal rate can trigger further USD upside. POSSIBLE BEARISH SURPRISES With the Fed signalling a data dependent policy stance, we expect a cyclical reaction from the USD with incoming US data. Thus, extremely bad growth, inflation or jobs data is expected to trigger short-term bearish reactions in the USD. If the cyclical outlook starts to improve, the USD’s safe haven status still matters. Any incoming catalysts that decrease deep recession fears and triggers strong moves higher in risk assets & bonds can trigger safe haven outflows out of the USD. With a lot priced in for the Fed and the USD, it won’t take much to disappoint on the dovish side. Any big concerns about growth from Fed speakers could trigger outflows. BIGGER PICTURE The fundamental outlook for the USD remains bullish as long as the Fed stays hawkish and cyclical concerns put pressure on risk sentiment. The data dependent stance from the Fed means that short-term data surprises can pull the USD either way and would be our preferred way of trading the Dollar right now. We have a very excited economic calendar for the US in the week ahead, with lots of important economic data and the FOMC meeting. For the econ data our expectation is for a cyclical reaction where very good data is expected to support the USD and very bad data expected to pressure the USD. As for the Fed, the main focus will be on whether the FOMC confirms a downshift in the pace and size of hikes.
by thunderpips
1
EUR USD - FUNDAMENTAL DRIVERSEUR FUNDAMENTAL OUTLOOK: WEAK BEARISH BASELINE HICP >9% saw another 75bsp hike this past week. ECB sources noted the bank is planning to discuss QT at their Dec meeting. On spread fragmentation, the bank didn’t provide any new info or clarity on how the eligibility might impact countries like Italy and Spain. Until the BTP/Bund spread breaches 2.55%, markets will have to wait and see whether TPI can make a difference. The main driver for the EUR is the economic outlook, but there are a few different conflicting drivers. Gas supply from Russia remain closed, but energy reform plans have seen EU gas prices lose ground. The war in Ukraine remains a risk, but recent victories by Ukraine has been a more positive development. POSSIBLE BULLISH SURPRISES De-escalation or cease fire in Ukraine. Stagflation risks remains, but with lots of bad news priced any materially better-than-expected data could spark some relief. Any TPI comments that convinces markets it can solve spread fragmentation issues should be supportive for the EUR. Resumption of Nord Stream gas flows or if gas storage can see Europe through winter, would ease some of the pressure. Given the EUR’s DXY weighting, better overall risk sentiment that pressures the USD should be supportive for the EUR. POSSIBLE BEARISH SURPRISES Escalation in Ukraine war that risks NATO involvement. Stagflation risks remains, even with lots of bad news priced any materially worse-than-expected data could see more pressure. If ECB fails to act on the TPI when we see big jolts higher in the BTP/Bund spread could trigger bearish reactions in the EUR. Announcements that Europe gas storage won’t make it through the winter without resumption of gas flows. Given the EUR’s DXY weighting, continued sour risk sentiment that supports the USD should be negative for the EUR. BIGGER PICTURE The fundamental outlook remains bearish with recent data pointing to a higher likelihood of a EZ recession. Current bearish drivers (geopolitics, stagflation, spread fragmentation, energy supply) outweigh the positives. Recession risks remain high and means incoming data like growth & inflation will be watched closely. For now, the focus for the EUR is on multiple fronts from energy to policy to geopolitics, which means we don’t want to be hasty with looking for new EUR trades and want a very clear reason and catalyst to trade the currency in the short-term. USD FUNDAMENTAL OUTLOOK: BULLISH BASELINE With headline CPI above 8% and Core CPI seeing another acceleration in the SEP CPI data, the Fed is under pressure to continue hiking rates and ramping up QT. Markets expect another 75bsp hike in NOV and currently prices the terminal rate at 4.89%. The Fed is on a data-dependent (meeting-by-meeting) policy stance, meaning incoming growth, inflation and jobs data remains a key driver for short-term USD volatility where we expect a cyclical reaction with incoming data for both the USD and US10Y (good data expected to be supportive for the USD while bad data is expected to pressure the USD). Our expectation for a softer USD this past week played to our advantage with a punchy move lower in the Dollar. The week ahead is filled with lots of US economic data and the FOMC policy decision which will all be important drivers for the USD. POSSIBLE BULLISH SURPRISES With the Fed signalling a data dependent policy stance, we expect a cyclical reaction from the USD with incoming US data. Thus, extremely good growth, inflation or jobs data is expected to trigger short-term bullish reactions in the USD. If the cyclical outlook continues to weaken, the USD’s safe haven status still matters. Any incoming catalysts that increase deep recession fears and triggers strong moves lower in risk assets & bonds can trigger safe haven flows into the USD. With a lot priced for the Fed and USD, the bar is high for hawkish Fed surprises, but any aggressive Fed speak talking up a >5.0% terminal rate can trigger further USD upside. POSSIBLE BEARISH SURPRISES With the Fed signalling a data dependent policy stance, we expect a cyclical reaction from the USD with incoming US data. Thus, extremely bad growth, inflation or jobs data is expected to trigger short-term bearish reactions in the USD. If the cyclical outlook starts to improve, the USD’s safe haven status still matters. Any incoming catalysts that decrease deep recession fears and triggers strong moves higher in risk assets & bonds can trigger safe haven outflows out of the USD. With a lot priced in for the Fed and the USD, it won’t take much to disappoint on the dovish side. Any big concerns about growth from Fed speakers could trigger outflows. BIGGER PICTURE The fundamental outlook for the USD remains bullish as long as the Fed stays hawkish and cyclical concerns put pressure on risk sentiment. The data dependent stance from the Fed means that short-term data surprises can pull the USD either way and would be our preferred way of trading the Dollar right now. We have a very excited economic calendar for the US in the week ahead, with lots of important economic data and the FOMC meeting. For the econ data our expectation is for a cyclical reaction where very good data is expected to support the USD and very bad data expected to pressure the USD. As for the Fed, the main focus will be on whether the FOMC confirms a downshift in the pace and size of hikes.
by thunderpips
2
InvestMate|EUR/USD Euro is growing in strength💶EUR/USD Euro is growing in strength 💶The euro is showing signs of strength in the current week. Is a correction in the downtrend getting ready? 💶Looking at the Unemployment rate in the Eurozone, it stands at 6.6%, the lowest on record. 💶Inflation is already close to 10% and on the 31st when there will be a flash year-on-year reading it is forecast to be 10.1% 💶Interest rates have been raised by 75 basis points and the market is betting on another 75 point hike to 2%. The decision will be made on Thursday 27 October. 💶The consumer sentiment index, which is off its lowest levels in years, has started to slowly rise and the market expects the positive trend to continue in the coming months. There will be another reading on 28 October. 💶💵Overseas, a very different situation. 💵Unemployment rate at low levels of 3.5% I💵nflation has already been falling since June and the market assumes that the next reading on 10 November will maintain the downward trend 💵Interest rates are already at 3.25% and the market assumes another 75 point hike to 4%. The decision will take place on 2 November. 💵Consumer sentiment scored its bottom in June and we have been on an upward trend since that month. 💵Looking at the situation in the US with falling inflation further interest rate rises may not be so necessary anymore, looking at how strong the dollar is, I think the euro has more upside potential in the next months. 💵Moving to the chart 📈We can see that we have been in a downtrend since 7 January 2021 📈We are currently struggling at parity level and I think there is a good chance of defending it and breaking out on the upside. 📈Is there a chance to pass the range of the biggest correction in the downtrend, by measuring we come out with a target at the level of 1.01 📈This also coincides beautifully with the measurement of the last upward wave and forms a cluster with the previous measurement of the correction of 1:1 📈Since 28 September we have made a bottom and started a trend reversal. After making wave 1 and wave 2 it was time for wave 3. 📈By taking a position at this point and placing a stop under today's candle we arrive at a risk-reward ratio of 1.1 🚀If you appreciate my work and effort put into this post I encourage you to leave a like and give a follow on my profile.🚀
Long
by InvestMate
25
EUR USD - FUNDAMENTAL DRIVERSEUR FUNDAMENTAL OUTLOOK: WEAK BEARISH BASELINE Inflation >9% saw a 75bsp ECB hike in September. Post-meeting sources noted the bank is planning to discuss QT at their October meeting. The President showed more communication tact by not giving any clues on estimates for the terminal rate. On spread fragmentation, the bank didn’t provide any new info or clarity on how the eligibility might impact countries like Italy and Spain. Until the BTP/ Bund spread breaches 2.55%, markets will have to wait and see whether TPI can make a difference. The main driver for the EUR is the economic outlook, but there are a few different conflicting drivers. Gas supply from Russia remain closed, but energy reform plans have seen EU gas prices lose ground. The war in Ukraine remains a risk, but recent victories by Ukraine has been a more positive development. Flash PMI data will be important to watch, but Thursday’s ECB meeting might get the most attention. STIR markets have priced 76bsp for the meeting, which means a 75bsp won’t be enough to get markets excited and focus will fall to the ECB’s tone. POSSIBLE BULLISH SURPRISES De-escalation or cease fire in Ukraine. Stagflation risks remains, but with lots of bad news priced any materially better-than-expected data could spark some relief. Any TPI comments that convinces markets it can solve spread fragmentation issues should be supportive for the EUR. Resumption of Nord Stream gas flows or if gas storage can see Europe through winter, would ease some of the pressure. Given the EUR’s DXY weighting, better overall risk sentiment that pressures the USD should be supportive for the EUR. POSSIBLE BEARISH SURPRISES Escalation in Ukraine war that risks NATO involvement. Stagflation risks remains, even with lots of bad news priced any materially worse-than-expected data could see more pressure. If ECB fails to act on the TPI when we see big jolts higher in the BTP/ Bund spread could trigger bearish reactions in the EUR. Announcements that Europe gas storage won’t make it through the winter without resumption of gas flows. Given the EUR’s DXY weighting, continued sour risk sentiment that supports the USD should be negative for the EUR. BIGGER PICTURE The fundamental outlook remains bearish with recent data pointing to a higher likelihood of a EZ recession. Current bearish drivers (geopolitics, stagflation, spread fragmentation, energy supply) outweigh the positives. Recession risks remain high and means incoming data like growth & inflation will be watched closely. For now, the focus for the EUR is on multiple fronts from energy to policy to geopolitics, which means we don’t want to be hasty with looking for new EUR trades and want a very clear reason and catalyst to trade the currency in the short-term. With markets fully priced for another 75bsp hike, the attention will fall on the tone and language of the statement and press conference. USD FUNDAMENTAL OUTLOOK: BULLISH BASELINE With headline CPI above 8% and Core CPI seeing another acceleration in the SEP CPI data, the Fed is under pressure to continue hiking rates and ramping up QT. Markets expect another 75bsp hike in NOV and currently prices the terminal rate at 4.8%. The Fed is on a data-dependent (meeting-by-meeting) policy stance, meaning incoming growth, inflation and jobs data remains a key driver for short-term USD volatility where we expect a cyclical reaction with incoming data for both the USD and US10Y (good data expected to be supportive for the USD while bad data is expected to pressure the USD). Even though the USD had good composure for the majority of the week, the WSJ article, BoJ intervention and less hawkish comments from Fed’s Daly saw a strong push lower in the DXY . Given what has been priced for the USD and yields, the Daly comments and WSJ article gives us a short-term downside bias for the USD in the week ahead. POSSIBLE BULLISH SURPRISES With the Fed signalling a data dependent policy stance, we expect a cyclical reaction from the USD with incoming US data. Thus, extremely good growth, inflation or jobs data is expected to trigger short-term bullish reactions in the USD. If the cyclical outlook continues to weaken, the USD’s safe haven status still matters. Any incoming catalysts that increase deep recession fears and triggers strong moves lower in risk assets & bonds can trigger safe haven flows into the USD. With a lot priced for the Fed and USD, the bar is high for hawkish Fed surprises, but any aggressive Fed speak talking up a >5.0% terminal rate can trigger further USD upside. POSSIBLE BEARISH SURPRISES With the Fed signalling a data dependent policy stance, we expect a cyclical reaction from the USD with incoming US data. Thus, extremely bad growth, inflation or jobs data is expected to trigger short-term bearish reactions in the USD. If the cyclical outlook starts to improve, the USD’s safe haven status still matters. Any incoming catalysts that decrease deep recession fears and triggers strong moves higher in risk assets & bonds can trigger safe haven outflows out of the USD. With a lot priced in for the Fed and the USD, it won’t take much to disappoint on the dovish side. Any big concerns about growth from Fed speakers could trigger outflows. BIGGER PICTURE The fundamental outlook for the USD remains bullish as long as the Fed stays hawkish and cyclical concerns put pressure on risk sentiment. The data dependent stance from the Fed means that short-term data surprises can pull the USD either way and would be our preferred way of trading the Dollar right now. The econ calendar is slightly more exciting compared to last week with S&P Global PMI, Consumer Confidence and Core PCE, but after the Fed Daly comments and the WSJ article we suspect the USD could trade softer next week as the Fed enters their blackout period from Saturday.
by thunderpips
2
Today’s Notable Sentiment ShiftsEUR – The euro dropped back below parity against the dollar on Thursday after the European Central Bank raised rates by 75 basis points, as expected, but hinted at a slower pace of future increases. Commenting after the announcement, Vanda Research noted: “The ECB is living on the edge of a dovish pivot. It’s clear that this is a central bank that wants to front load rate hikes to control inflation. But they are also wary that they are not in control of a lot external growth and market factors that can act as a circuit breaker to the hiking cycle.”
by thunderpips
EURUSD - Short if cross fibo 38,2Resistance at 0.98857 looked at 1hour tf, and a second resistance at 0.98436. We can see we already had two retracements and can be the next consolidation area. However when we use de fibonacci we can look at 38,2% and see a future support there if not crossed, moretheless if cross it, EURUSD will short. The pair already have a strong short position since we have the MACD crossing the 0, and the canes shadows is touching and following the lower BB line. Together we can analyze the moving average, moving away from the middle line from BB. This is not in the screenshot, but if you use RSI and the Stoch in 30m or 1H you'll see the indicators line is going down. RSI is very close from the 50.0
Short
by AFCapital21
2
EURUSD: ECB Interest Rate Decision next weekOn Friday the 21st, we saw the USD drop on a bad Monthly Budget Statement. This has given us reason to think that investors will not be looking at the dollar as a safe haven currency. There might be a long term trend reversal in play next week ahead of the ECB Interest Rate Decision. An increase of the interest rates should act as bullish catalyst for the Euro. Wait for a breakout of the long term trend line, and look for signs of bullish continuation to the upside on the retest of the long term trend line. Good luck traders.
Long
by CryptodopamineFX
EURUSD: USA is not happy about inflation, bears are warming up.Hey traders, in today's trading session we are monitoring EURUSD for a selling opportunity as Fed Powell is heading towards a massive rate hike the coming meeting on November due to inflation above expectation. EURUSD is already giving us a good entry on bigger timeframes to consider. Once Technicals meet fundamentals that's should be a high probabilistic trade. But nothing is certain on the market consider a proper risk management is important.
Short
by JoeChampion
25