Forex Market Fundamental Analysis Nov-22, 2021

somrat4030

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Euro weakness has been the theme for most of the year but it is perhaps against the US dollar that this will continue to be felt the most. ECB President Christine Lagarde has maintained, at great length, a supportive and accommodative tone despite inflation reaching 4.2% (YoY) in October.​


In contrast, The US is coming off better-than-expected retail sales data and red hot inflation, adding pressure to the tapering timeline and rate hike expectations. Just last week, Fed Vice-Chair Richard Clarida said that the tapering timeline warrants discussion at December's Fed meeting which continues to support the recent strength of the dollar. Last week's rate cut by the Turkish Central Bank kickstarted a move away from EM currencies (USD/ZAR, USD/TRY and USD/MXN) towards traditional safe haven plays (USD, CHF, JPY).

On the other hand, AUD/USD has reversed lower from previous session highs in the 0.7270s, amid a knee-jerk strengthening of the USD after the announcement from the White House that Jerome Powell would be nominated for a second term as Fed Chair. AUDUSD has now slipped back to the 0.7240s, where it still trades with on-the-day gains of about 0.15%. Analysts said that AUD outperformance on Monday could be to do with stronger iron ore prices, as well as positive reopening news in the region.

Moreover, US stock markets rebound after mixed close on Friday​


Wall Street is set to open higher in the shortened trading week due to Thanksgiving, despite the rising concerns over the resurgence of Covid-19. Specifically, Nasdaq futures are trading 0.6% higher in the pre-market trade, while S&P500 and Dow Jones futures are gaining 0.3%.

Elsewhere, USD/JPY options are pricing out Brainard Fed chair risk that helped to lift downside strike premiums on 1-month expiry risk reversals Friday-Monday. USD/JPY 1-month vol by recent and 1-year highs around 7.25.​

GBP/USD 1-month sits just below recent 8.1 highs with a firm volatility premium for GBP puts over calls (downside strikes). EUR/USD 1-month vol at 7.0 is the highest in a year, and risk reversals sit just below last week's new longer-term highs for EUR puts/USD calls (downside strikes).

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EURUSD in FXOpen trading platform still tendencies to bearish movement, if the look on price history, the decline already stared as June, and still continue bearish, although the US also faced with inflation but seems euro zone countries still in the problem to recovery economy after pandemic and according to the news, pandemic outbreaks still arise in some euro countries.
 
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