The Euro rallied significantly last week but then gave back all the gains as we started to see yields in America increase yet again.
The US Fed seems that will continue its soft monetary policy, even as inflation expectations rise caused by a doubling of the Fed’s balance sheet over the past year.
Nevertheless, not only the US has the problem of increasing national debt. Europe is experiencing similar problems, and the interest rate there is even lower than on the other side of the Atlantic. The profitability of European government securities is also growing. Consequently, the rate on 10-year bonds in Germany has already reached an 11-month high.
If you look at the chart, since December 2020, most of the time it moves in a fairly narrow trading range of 1.2050-1.2185, with emissions up to 1.1950 and 1.2350.
If we talk about the short term, 70% of analysts believe that the pair will continue to decline to the 1.1950-1.2000 zone. They are supported in this by 75% of oscillators on H4, the remaining 25% give signals that the pair is oversold. As for the oscillators on D1, there are approximately equal shares of red, green and gray-neutral colors. 95% of the trend indicators on H4 and 65% on D1 are painted red.
Next week will be full of economic announcements. Firstly, we are waiting for speeches of the head of the ECB Christine Lagarde on Monday (March 1st) and the head of the US Federal Reserve Jerome Powell on Thursday (March 4th).
Statistics on the consumer markets of Germany and the EU will be released on March 1st , 2nd and 4th. As for the US macro statistics, the indicators of ISM business activity in the manufacturing and private sectors will be known on Monday and Wednesday. And in addition, data on the labor market will be published on Wednesday and Friday.
Moreover, according to forecasts, a significant increase in new jobs created outside the US agricultural sector (NFP) is possible – from 49K to 148K;
We remain neutral waiting for the US NFP results and the end of the week.
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