Home Forex Euro consider risk premium. Forecast as of 18.10.2022

Euro consider risk premium. Forecast as of 18.10.2022

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Positive news is reassuring to receive when disaster is approaching but not coming. EURUSD has many take-off factors and the pair is rising. what’s next? Discussing the outlook for foreign exchange, EURUSD trading plan.

Weekly Euro Fundamental Forecast

As soon as the crisis becomes manageable, demand for the US dollar as a primary safe haven currency will drop. Withdrawal of fiscal stimulus in the UK, gas prices in Europe falling to their lowest level since June when Russia first cut gas flows to Germany via Nordstream, and US banks better than expected With strong reports, EURUSD Record the highest daily rise in the last two weeks. When the crisis looks less scary, risky assets move on.

Britain’s new Treasury Secretary Jeremy Hunt has moved to reassure markets about the country’s financial stability, withdrawing almost all of the government’s proposed £45bn tax cuts, and introducing energy price cap subsidies. Investors were relieved and favored other European currencies, including the pound and the euro. How long will the support last? There is a risk premium in the price of UK assets, which is ridiculous. The rise in sterling is temporary as higher bond yields and less fiscal stimulus are likely to exacerbate the looming recession.

Gas prices fell sharply on the back of the EU debate on gas futures price capping options and predictions of warming in Europe. The energy crisis no longer seems catastrophic. EURUSDSo the improvement in the world situation supports the euro. However, it should be understood that prices are still several times higher than last year, the German economy is under pressure, and other eurozone economies will also face a downturn. According to Bloomberg experts, Germany’s GDP is projected to shrink by 0.5% in his 2023, while the Eurozone’s GDP is projected to fall by 0.1%.

European GDP forecast

sauce: Bloomberg.

i don’t think EURUSD Bears are horrified by the likelihood of a US recession rising from 65% to 100% over the next 12 months, according to a Bloomberg model. A looming recession in the world’s largest economy will only spur demand for the US dollar, which has always acted as a safe haven asset.

The rise in US stock indices is due to lower expectations for corporate earnings. Banks show smaller than expected losses and when the market looks oversold a small driver is enough for it to move up. may not.drop of S&P 500 Push down EURUSD.

every week EURUSD trading plan

In summary, EURUSD The rise was due to stabilization of UK financial markets, lower gas prices and a good start to the US reporting season. The euro’s upward revision is limited as each of these factors does not appear to be fundamentally strong. We recommend selling EURUSD up to 0.989, 0.992 and 0.9955.

EURUSD price chart in real time mode

The content of this article reflects the opinions of the author and does not necessarily reflect the official views of Right Finance. The material on this page is provided for informational purposes only and should not be considered as providing investment advice for the purposes of Directive 2004/39/EC.

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