Threat of high inflation could weaken EUR

6 de mai. de 2022

Rising high inflation has made several central banks in various countries tighten liquidity to prevent high and uncontrolled inflation from occurring, but the slower approach taken by the European Central Bank (ECB) in starting interest rate hikes can be seen from the steps taken are not as aggressive as several other central banks such as The Fed, Boe and RBA, which yesterday to record inflation The Fed raised 50 bps, followed by the BOE which raised interest rates for 4 consecutive meetings.
While the ECB remains dovish in tone, this is because some ECB officials see the economic downturn caused by the Ukraine war and the threat of a gas shutdown also poses a serious threat to the economy. Some bet that inflation in Europe could surpass the US. This is because some officials think that monetary tightening is aimed at reducing inflation in the end it will hamper economic growth, which has already weakened due to rising energy prices. Unlike in the US, inflation is mostly driven by shocks from the demand side.
Market Direction
By looking at the phenomenon above, it can be concluded that the EUR currency is predicted to tend to weaken against the USD and AUD currencies
The pair EUR/AUD leads to bearish
Entry Sell
R1: 1.485405
R2: 1.490642
R3: 1.495878
Take Profit
S1: 1.463936
S2: 1.456213
S3: 1.446133