On Monday, November 15, the euro fell 0.67% against the dollar, to 1.1367. The euro traded in positive territory before the speech of the head of the ECB K. Lagarde and the ECB economist Lane. Lagarde echoed her expectations that rates are unlikely to rise in 2022. She also believes that tightening measures now do more harm than good. Lane expects inflation to be below 2% in 2023.
ECB spokesman DeGuindos said rising energy costs have an impact on economic growth. He also believes that the factors of inflation are temporary. The ECB is doing everything to make the euro weaken against the US dollar and other currencies.
Also, a surge in the incidence of coronavirus had a negative impact on the single currency. The authorities of a number of European countries (Denmark, France, Italy, the Netherlands, Greece) are forced to strengthen anti-coronavirus measures.
Bank of England Governor Eduard Bailey, speaking before a special committee of the Treasury of the British Parliament, said that he is very concerned about the inflation situation.
Scheduled statistics (GMT +3):
- At 10:00, in the UK will be released the report on the labor market
- At 10:45, France is to publish the final CPI data for October.
- At 13:00, Eurozone Change in the number of employed (preliminary data), Change in GDP (preliminary data) for Q3.
- At 16:30, the US is to publish data on retail sales.
- At 17:15 in the US will be released a report with data on industrial production for October.
- At 19:10, ECB President Christine Lagarde will deliver a speech.
- At 20:00, the Deputy Governor of the Bank of Canada Laurence Shaumbri, President of the FRB of Richmond Thomas Barkin, and President of the FRB of Atlanta Rafael Bostick will deliver speeches.
- At 23:30, San Francisco FRB President Mary Daly will deliver a speech.
Current situation:
At the auctions in Asia, the main currencies were trading in positive territory, now most of them are colored red. The topic of inflation in the US and the early tightening of monetary policy by the US Federal Reserve are the main topics for all markets.
On Tuesday, it is worth paying attention to the statistics in the eurozone and the United States. Volatility may rise on data on industrial production in the United States. Lagarde and representatives of the US Federal Reserve may also have an impact on the market.
Technical analysis:
On Monday, buyers failed to gain a foothold in the balance line (SMA55). Sellers pushed the price below 1.1430 amid statements by Lagarde and Lane. The minimum is fixed at 1.1356.
Now the euro is given $ 1.1377. The price is correcting after yesterday's fall. There are two levels of resistance: 1.1400 and 1.1425. On the weekly TF, the targets are in the region of 1.1250 and 1.0900. Sellers on higher timeframes began to connect after breaking through the level of 1.1530. The 1.1290 level is the 61.8% Fibo level of the rise from 1.0636 to 1.2350.
The EUR/GBP cross found temporary support at 0.8475. If buyers are able to resist sellers and develop an upward correction, then the EUR/USD pair will also have a correction to 1.1400. The technical picture is on the side of sellers. There are almost no factors for strengthening the euro. Verbal interventions by ECB representatives on inflation finished off buyers. Let's see what the representatives of the US Federal Reserve will say about inflation.
Summary: the new week for the euro began with a fall. Lagarde, Lane and DeGuindos finished off buyers with their claims of temporary inflation and their reluctance to raise rates until 2023.
The price is correcting after yesterday's fall. There are two levels of resistance: 1.1400 and 1.1425. The technical picture is on the side of sellers. There are almost no factors for strengthening the euro. Growth should be viewed as a correction. At any moment, the fall can increase to 1.13.