What idea will dominate in Forex? Will investors expect US inflation to slow down and the Fed suspend monetary tightening? Will there be a dispute among the ECB members? Let us discuss the Forex outlook and make up a EURUSD trading plan.
Weekly US dollar fundamental forecast
It is a fatal error to believe that central banks alone will take inflation under control and save the global economy from the worst cost-of-living crisis in decades. More effort is needed by the governments and commodity markets. In this regard, the White House’s willingness to cancel tariffs on $300 billion of Chinese imports and a decline in commodity prices suggest hope for a slowdown in consumer prices, pressing down the US dollar. However, the EURUSD bulls do not seem to go ahead. The euro has its own soft points.
Natural gas prices jumped 60% and then fell. Oil traded above $120 per barrel but is now far from local highs. Wheat, corn, and soybeans are quoted cheaper than in March. Cotton has collapsed, losing a third of its value since early May. The basket of manufactured goods traded in London has experienced its worst quarterly drop since the 2008 crisis. Lower commodity prices indicate that inflation is cooling down. If so, the Fed probably won’t have to act as aggressively as expected. This is bad news for the US dollar.
What idea will dominate in Forex? Will investors expect US inflation to slow down and the Fed suspend monetary tightening? Will there be a dispute among the ECB members? Let us discuss the Forex outlook and make up a EURUSD trading plan.
Weekly US dollar fundamental forecast
It is a fatal error to believe that central banks alone will take inflation under control and save the global economy from the worst cost-of-living crisis in decades. More effort is needed by the governments and commodity markets. In this regard, the White House’s willingness to cancel tariffs on $300 billion of Chinese imports and a decline in commodity prices suggest hope for a slowdown in consumer prices, pressing down the US dollar. However, the EURUSD bulls do not seem to go ahead. The euro has its own soft points.
Natural gas prices jumped 60% and then fell. Oil traded above $120 per barrel but is now far from local highs. Wheat, corn, and soybeans are quoted cheaper than in March. Cotton has collapsed, losing a third of its value since early May. The basket of manufactured goods traded in London has experienced its worst quarterly drop since the 2008 crisis. Lower commodity prices indicate that inflation is cooling down. If so, the Fed probably won’t have to act as aggressively as expected. This is bad news for the US dollar.
The concerns of the Bundesbank’s governor are natural. Germany will be a donor for Italy, Greece, Spain, and Portugal. However, Germany has its own problems, including the first €1 billion trade deficit in 30 years.
Weekly EURUSD trading plan
It is difficult to predict which investment idea will take over, either a slowdown in US inflation or a split among the ECB members. Therefore, one could buy if the EURUSD breaks out the resistances at 1.047 and 1.049 or sell if the price goes below supports at 1.0415 and 1.037.
Myanfx-edu does not provide tax, investment or financial services and advice. The information is being presented without consideration of the investment objectives, risk tolerance, or financial circumstances of any specific investor and might not be suitable for all investors.
Go to Register with LiteForex Platform
Financial Trading is not suitable for all investors & involved Risky. If you through with this link and trade we may earn some commission.
