Forex FOREX PRO WEEKLY, July 18 - 22, 2022

[sveckar22]

I have read and re-read this post again in combination with the video where you explain how they have not done the QT to the amount they previously said they will. If I understand correctly we are past the point of no return because of debt, inflation, and consequently the bond market as no option leads to a good outcome:

• If FED keep raising the interest rate; first they can not increase it anywhere near the inflation rate, and it will make financing the debt even more expensive and put even more pressure on households and kill the markets (asset prices) and economy
• If they want to reverse course and save the markets (asset prices) and start a new round QE this will increase inflation in the future, so maybe bond prices get support in the short term but as inflation will increase even more nobody will want buy treasuries again at so much lower the rate of inflation so the investors will start leaving the bond market again, the prices of bonds will drop again and coming up with the money for financing the debt will be even more difficult in the future

Thank you

 

[Sive Morten]

I have read and re-read this post again in combination with the video where you explain how they have not done the QT to the amount they previously said they will. If I understand correctly we are past the point of no return because of debt, inflation, and consequently the bond market as no option leads to a good outcome:

• If FED keep raising the interest rate; first they can not increase it anywhere near the inflation rate, and it will make financing the debt even more expensive and put even more pressure on households and kill the markets (asset prices) and economy
• If they want to reverse course and save the markets (asset prices) and start a new round QE this will increase inflation in the future, so maybe bond prices get support in the short term but as inflation will increase even more nobody will want buy treasuries again at so much lower the rate of inflation so the investors will start leaving the bond market again, the prices of bonds will drop again and coming up with the money for financing the debt will be even more difficult in the future

Thank you

Exactly, Luka. This is the reason, why we disagree with BofA, GS and others, who suggest that signs of recession now and possible stop hiking by the Fed should lead to decreasing of inflation.

 

[Sive Morten]

Morning everybody,

So, reaction on ECB decision was a bit weaker than suggested, as market has reversed first upside jump very fast. This increases chances on deeper retracement right from current levels. Besides, daily pullback more or less equals to harmonic swing of retracement here.
In general, 0.5% rate change with inflation above 10% is nothing. Besides, ECB has announced new QE programme of buyback bonds of highly indebted countries to control disbalances on the bond market. This is the same like fight inflation with printing more money. It means that inflation will keep rising in EU. Next rate shift is expected only in autumn, so the big time lag is also not in favor of EUR.

Right now it is possible to try to go short, as we have the pattern, weak ECB statement and resistance. The only tricky moment that I'm concerned about is flat standing, as EUR has not continued downside action right after ECB. But, it might be just too few time has passed since the ECB and market needs a bit more for decision making. If do not pay attention to this concern - all other moments are in favor of downside retracement:

On 4H chart we have the pattern - solid bearish engulfing, that here, on 1H chart is also the W&R, which is also bearish. Thus, we do know invalidation point. If you a perfectionist, you could try to catch minor AB-CD upside action to get perfect entry and minimize possible loss. The minimum target is 5/8 support @1.0077 area.

If you still have some doubts then probably it makes sense to either split position into parts or just wait for possible reaching of our next resistance @1.0365 and see what will happen there...

 

[FreddyFX]

down we go

 

[Vokin]

All PMIs in RED. There is no doubt about the economic condition of the Eurocratic Empire...

 

[FreddyFX]

Went to bed, now at my desk and notice the whole drop was in vain, back and above OPEN of the day.
Guess next week will be an interesting one.