EUR/USD Falling Just As Fast After the Reversal, ECB Sees Inflation High into 2013
The ECB meeting minutes showed that they expect inflation to remain high well into 2023, but EUR/USD has resumed the decline again
Skerdian Meta•Friday, October 7, 2022•1 min read
[[EUR/USD]] made a strong bullish move last week, which continued in the first two days of this week. It reached parity and it started reversing immediately. The 50 SMA (yellow) also helped end the retrace and now this pair has lost more than 200 pips. This shows that the main trend is still bearish for this pair and further lows are expected. The German government is forecasting a recession in 2023, which will continue to drag the Euro down.
EUR/USD Daily Chart – The 50 SMA Held As Resistance
The 50 SMA keeps rejecting the price
According to a report, the German government is seeing a recession in 2023, although that is not a new thing. Reuters has obtained provisional figures from the German government on economic forecasts and they show:
- 1.4% GDP growth this year
- -0.4% GDP decline next year
- Inflation at 7.9% this year
- Inflation at 8.0% in 2023
Those inflation numbers are painful.
ECB Minutes
- Inflation was far too high and was expected to remain above the governing council’s target for an extended period of time.
- A large number of members favoured raising the key ECB interest rates by 75 basis points.
- Expectations for inflation remained stable, and wage growth remained moderate, with little evidence of second-round effects.
- Over the entire projection horizon, the risks associated with the projected inflation path remained skewed to the upside.
- The size of the upward revision in the staff inflation projection for 2024 was not deemed large enough to necessitate a more aggressive response.
- The expected slowdown in economic activity would not be sufficient to significantly reduce inflation.
- Without a timely reduction in monetary policy accommodation, inflationary pressures caused by euro depreciation may worsen.
EUR/USD Live Chart
EUR/USD
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Skerdian Meta
Lead Analyst
Skerdian Meta Lead Analyst.
Skerdian is a professional Forex trader and a market analyst. He has been actively engaged in market analysis for the past 11 years. Before becoming our head analyst, Skerdian served as a trader and market analyst in Saxo Bank's local branch, Aksioner. Skerdian specialized in experimenting with developing models and hands-on trading. Skerdian has a masters degree in finance and investment.
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