As the currency market fast approaches the end of the last trading sessions of the year. Several undisputed expectations as regards rate hikes, hyperinflation sermons, Non-farm Payroll (NFP updates), and the November 2-3 FOMC meeting put most market participants in an unending traumatic trading mood. And to give the situation a more welcoming approach, considering the triggers that could hinder the fundamental price action of the pair either on a bullish or a bearish tone will be the right way to tackle the over circulated trend thats flowing around the currency market.
What are the key economic indicators, and why should you pay attention to them？ Having a good understanding of why the market is behaving in a certain direction is very crucial to your success as a Forex trader. And to get the first hand “eye-opening” viewpoints into the market. Below are some of the price action setups we believe could trigger the reaction of the EUR/USD market in the coming weeks ahead.
November Federal Reserve Conference:
Is it about raising rates or maintaining the usual standard？ The federal reserve chairman and the members of FOMC are most likely to provide answers to this question. While we wait for the policymakers to decide what action will be the best option for the overall quality of the US dollar against its other equivalent. You should know the Feds chair Jeremy Powell stated in September that the US monetary policy body has no cognizant reason for authorising rate hikes. But to live on this speech it‘s less likely this pronouncement will be rewarded with validity in the forthcoming November FOMC meeting, as the US economy is seen dwelling in a continuous hyperinflation Mirage. Market participants such as the interbank market don’t prefer to witness the appearance of rate hikes this year. Hence, a result below the expectations of the market could trigger more negative price action to the greenback. Likewise, a tightening monetary policy by the Fed could cause a stronger strength of the dollar against its major counterparts.
Hyperinflation On The US Dollar
As the US inflation rate is proposed to outweigh the average annual inflation gauge of the 2% allocated by the Feds, itll be best to say that the policymakers will more often than not approve a measure of curbing the increase in inflation. A considerable strategy for controlling the level of inflation can help stabilize the buying power of the dollar against the Euro. Because investors will be happy to increase the demands of the dollar.
The ECB President Speech
Last week Thursday the ECB President Christine Lagarde said there are no rate hikes in the UK beginning from late 2021 to the end of 2022, as the president posed that the present situation of inflation in the country is in a temporary mood. With this statement, the EUR/USD market saw a rapid decline in price from a height of 1.16849 to a price point of 1.1582 At most the effect of the Fed President speech at monetary policy conference would serve as a leverage to short the Euro or go long on the pair, however, the reaction of the market will solely rely on the outcome of the news.
The Non-Farm Payroll Updates
One of the most important economic strength indicators for the US dollar is the monthly release of the NFP data. However, the increase in the number of job gains is very crucial to the success of the dollar as the consumer price index CPI will be altered because of the purchasing power displayed by citizens of the US. On the flip side, a decrease in job gains will cause the poor economic strength of the dollar. Thus, a decline in price action will be printed on the price of the dollar across the currency market. The previous forecast of the NFP of 300K exceeded the actual result of the 194K September total job gains. The forecast for October is set at 500K and if the outcome of the result should outperform this forecast an increase in the dollar's strength will be witnessed in the market. On the flip side, lower than expected records should be taken as negative for the USD.
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