🇪🇺 How to Trade the Euro this week (WN39) 🇪🇺
Analysis week commencing the 26th of September
Analysis determines that the Euro is to be sold against stronger currencies prior to the CPI reports on Thursday and Friday. If German CPI on Thursday or EU CPI on Friday is below expectations then it becomes suitable for buying against weaker currencies.
-FUNDAMENTAL AND SENTIMENT SUMMARY-
The Governing Council of the European Central Bank (ECB) met a few of weeks ago on the 8th of September and a decision was made to hike the Main Refinancing Operations Rate (Interest Rate) by 75bps from 0.50 percent to 1.25 percent which was as expected. The policy outlook is hawkish as Trading Economics are forecasting it to rise to 2.00 percent next year in 2023. The next scheduled meeting for the Governing Council is next month on Thursday the 27th of October.
With regards to economic indicators, the CPI rate for the twelve months to August (final) was reported a couple of weeks ago at 9.1 percent which was as expected and mostly driven by energy which was up 38.6 percent.
The near-term attention of speculators is on the Flash CPI report for the twelve months to September which releases on Friday and is expected to show 9.6 percent inflation. This would be an increase on the previous 9.1 percent and reflective of a worsening situation. Note that the German CPI data is out on Thursday.
The sentiment that is presently influencing the valuations on the Euro is the narrative regarding rising energy costs and how fast they inflate. At the last CPI report energy had inflated 38.6 percent which is very high but has fallen over the previous 39.6. A de-escalation on the war in Ukraine would be the fastest way to reduce energy but unfortunately, the situation has worsened this week as referendums look to place the regions in Russian territory although this would be outside of international agreements.
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-END DISCLAIMER-
The content provided is intended for informational purposes only. Investments on the forex markets and trading decisions are made at your own risk.