Powerful changes in the FX market: Euro to Dollar (EUR / USD) under tremendous pressure! – take a look at the currency forecasts [EURPLN, USDPLN, GBPPLN, CHFPLN]

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Couple € / US $ started last week falling below 1.12. The dollar continued to be supported by expectations of a quick rate hike in the US, while Europe faced another wave of the pandemic. At the end of the week, however, we saw a correction to over 1.13.

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Short-term investors quickly appeared when the technical signals of weakening of the trend appeared for the decline in € / US $.

Powerful shifts in the FX market: Euro to dollar (EUR / USD) under pressure with tremendous pressure!  - take a look at the currency forecasts [EURPLN, USDPLN, GBPPLN, CHFPLN] - 1

We expect the correction to € / US $ which was started on Friday this week to end

This Friday we will know the data from the American labor market (payrolls). A solid result should reassure investors that the most realistic scenario at the moment is fast Fed rate hikes. The economic situation in Europe still raises concerns as more countries decide to tighten sanitary restrictions (including the Netherlands, Belgium, Portugal, and earlier Austria, Slovakia and the Czech Republic). Therefore, by the end of the week, we expect another attempt to break € / US $ 1.12.

EUR-USD Eurodollar continues its sell-off and is heading towards support in the region of 1.1146. Previously, the formation of the head and shoulders with a slanted neck line was built, and after the breakout with the bottom, the theoretical downside roughly coincides with the ceiling of 1.1146. GBP-USD. Attempt to recover from the decline in the pound. Read

Will there be a currency quake?  Check forecasts and technical analyzes for the euro to dollar exchange rate (EUR-USD), pound to dollar (GBP-USD), euro to zloty (EUR-PLN), dollar to zloty (USD-PLN)

A lot of positive information from the USA

(including expectations for rate hikes in 2022) is already priced, and the market is already seeing risks for the economic situation in the euro area. Investors should start to price in the effects of the fiscal impulse from the Reconstruction Fund soon. Therefore, the room for a greater decline in the € / US $ pair may turn out to be limited (to ca. 1.1150-1.12), and at the end of the year we expect it to rebound. This scenario is also indicated by the seasonal weakness of the dollar at the end of the year, which may be associated with building new positions on risky assets after US funds have settled the results for this year.

Debt market – liquidity on POLGBs is still negligible

Last week started with yield gains in the core debt markets, but the whole move receded on Friday. This is the result of reports on a new variant of the coronavirus – omicron, which may be resistant to existing vaccinations. At the end of the week, the POLGBs strengthened, following the core markets. With low liquidity, this resulted in extreme changes in the market. According to some sources, the 10Y bond yield may have dropped by over 20bps.

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This week, POLGBs should follow the behavior of the core markets

However, low liquidity in the domestic market suggests that volatility will remain very high. The situation is unlikely to change until the end of the year without the support of the NBP or the Ministry of Finance. This suggests that this week the yields of the domestic 10Y bonds will approach their recent peaks again. The expected NBP interest rate hike in December should not limit expectations for further tightening of the NBP’s policy in the future.

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However, the current levels of yields are already very high, especially in relation to the strengthening of bonds in the core markets

Combined with the weak zloty, this is an argument for the return of foreign countries to the market. This, however, may not happen before the new year. The high volatility of the zloty or the uncertainty of what the borrowing needs will look like in a situation where it is not clear when Poland will receive access to funds from the Reconstruction Fund is discouraging. Investors may be afraid of domestic pre-financing for KPO projects in the event of a freezing of funds by the EU.

Powerful shifts in the FX market: Euro to dollar (EUR / USD) under pressure with tremendous pressure!  - take a look at the currency forecasts [EURPLN, USDPLN, GBPPLN, CHFPLN] - 5


About Eric Wilson

The variety offered by video games never ceases to amaze him. He loves OutRun's drifting as well as the contemplative walks of Dear Esther. Immersing himself in other worlds is an incomparable feeling for him: he understood it by playing for the first time in Shenmue.

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