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Eurozone Inflationary Pressures Increase, Emergency Bond Purchases May End In March

1. Forex Market Insight  


The European Central Bank (ECB) policymakers are preparing for inflation to exceed the central bank’s already upwardly revised forecasts, paving the way for an end to emergency bond purchases in March.  

The ECB plans to make a decision on the future of the Pandemic Emergency Purchase Program (PEPP) in December. It is expected that the inflation will fall back in 2022-23 after an exceptional jump this year as the economy returns to its pre-pandemic track.  

S&P Global Ratings stated that it has raised its economic growth and inflation forecasts for the eurozone this year, but expects inflation to fall back below its 2% target next year. The ratings agency said Europe’s economic recovery has been “surprisingly strong” since the embargo restrictions were lifted in March-April, prompting it to raise its growth forecast for this year to 5.1% from 4.4% previously. 

Technical Analysis:   

(EUR/USD 1-hour chart)   

Execution Insight:   

Today, pay attention to the 1.1705-line. If the euro is above the 1.1705 line, then pay attention to the suppression of the 1.1727 and 1.1753 positions. Once the euro falls below the 1.1705-line, pay attention to the 1.1663-line for support. 

GBP Intraday Trend Analysis   

Fundamental Analysis:   

The initial value of the IHS Markit/CIPS UK Composite Purchasing Managers’ Index (PMI) fell for the fourth consecutive month in September, from 54.8 in August to 54.1, the lowest since February. Whereas, economists gave an estimate of 54.5.

The survey showed that both the service and manufacturing sectors are slowing. Business expectations for service sector companies fell to a nine-month low. Simultaneously, the manufacturing PMI fell to 56.3 in September from 60.3 in August, also the lowest since February. September PMI data will add to concerns that the U.K. economy is heading for a wave of stagflation.  

Still, the Bank of England said the case for raising interest rates “appears to have strengthened” and it now predicts the U.K. inflation to reach more than 4% by the end of the year, more than twice the target level.  

Technical Analysis:   

(GBP/USD 1-hour chart)   

Execution Insight:   

The pound is still paying attention to the 1.3669-line today, operating above the 1.3669 line, and maintaining its bullish trend. Once the pound falls below the 1.3669-line again, then it will pay attention to the 1.3574-line of support. 

2. Precious Metals Market Insight   


Fundamental Analysis:   

In early trading today, spot gold is trading slightly higher near 1760.  

On Friday, 24th September 2021, gold prices rose slightly as risk aversion was high in the market and the U.S. was moving forward with a new stimulus bill. However, gains in the U.S. dollar and U.S. bond yields has limited the gains in gold prices.  

On intraday trading today, focus on the U.S. August durable goods orders and a number of Federal Reserve officials’ speeches. 

Technical Analysis:   

(Gold 1-hour chart)   

Trading Strategies:   

Today, gold pays attention to the 1755-line. As long as it runs above the 1755-line, it will maintain the bullish trend. At that time, pay attention to the suppression of the 1763 and 1768 positions. Once the price of gold falls below 1755, it will face the possibility of testing the 1741 first-line support again.

3. Commodities Market Insight   

WTI Crude Oil   

Fundamental Analysis:   

In early trading today, oil prices extended last week’s upward trend, with the U.S. oil hitting a near two-month high and approaching the 75 mark. Brent oil jumped about 1% to a near three-year high of $78.17 per barrel.  

With this, oil prices have rose for a fifth straight week last week to a near three-year high as inventories fell from the U.S. to Asia amid a global energy crisis that is set to boost demand for crude oil. 

Technical Analysis:   

(Crude oil 1-hour chart)   

Trading Strategies:   

Today, oil prices are focused on the support of the Bollinger Band Middle Rail. As long as the trend of the Bollinger Band Middle Rail is maintained, focus on the suppression of the 75.69-line. 

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