Feb-10, 2022, Currency trading analysis and latest forecast, by forex forum.
The EURUSD squeeze again larger
The EURUSD has retraced all of the CPI declines. Earlier than the info, the EURUSD was buying and selling at 114.34. The worth moved all the way down to 113.74. That stage examined the 50% midpoint of the transfer up from final Thursday's low. The low fell in need of the rising 200 hour transferring common at 1.1366.
Sellers turned the patrons, and after the worth transfer again above the 1.1400 stage for the second hourly bar after the discharge, shorts had been squeezed additional. The worth moved above the 100 day transferring common at 1.1416 after which moved above the 100 hour transferring common at 1.1429. As I sort, a brand new excessive for the day's being made at 1.14465.
Moreover, New US inflation highs heaps pressure on the Fed
"Another strong CPI report, with consumer prices exceeding expectations. Total/core prices rose 0.6% MoM each, above the 0.4%/0.5% consensus, respectively. The YoY pace reached new multi-decade highs at 7.5%/6.0% for headline and core CPI inflation, respectively."
"The stronger than expected January CPI report increases the odds of a firmer monetary policy response by the Fed. We continue to expect the FOMC to raise rates by 25bp at its March meeting, but another solid print in February will likely encourage the Fed to accelerate the pace of hikes in 2022 and hasten both the timing and pace of balance sheet runoff."
"The next ECB meeting comes a few days ahead of the Fed, which leaves us biased for a retest of 1.13 in EUR/USD, before looking for a more meaningful move topside. Meanwhile, we think USD/JPY is destined higher (118), especially with the BOJ still very far away from any sort of normalization this year. We expect this CPI print to place pressure in equities, and that will weigh on the antipodes."
On the other hand, RBA AND BOJ LAG BEHIND OTHER MAJOR CENTRAL BANKSThe Reserve Bank of Australia (RBA) has gone to great lengths to communicate to the market that it will remain supportive for as long as is necessary. In its recent statement on monetary policy for February, the Bank expects GDP to have reached 5% for 2021 despite Omicron and related lockdowns. The labor market has also tightened with unemployment as low as 4.2% in December and inflation, while heating up, is some distance away from levels experienced in the US or Eurozone. Ultimately, the Bank is satisfied with the current trajectory of monetary policy and remains accommodative as long as inflation remains within the 2 to 3 percent target range.
Bank of Japan (BoJ) Returns to Dovish Narrative
Earlier today the Bank of Japan's Nakamura reinforced the Bank's dovish stance after stating the BoJ must maintain its current easy policy until wages begin to grow steadily. In addition, Governor Kuroda mentioned that chances of a large jump in inflation are low and supports accommodative policy as inflation remains below 2%.
Dovish comments are typical from Japan's central bank however, in mid-January, news broke that the Bank was debating messaging on eventual rate hike – by far the most hawkish development in years - which ushered in a period of JPY buying.
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