On Monday, the movements of the euro and the pound were comparable, although the news background was only present in the UK and absent from the US and the EU. However, both instruments initially decreased (even at night), increased, then again decreased. The beginning of the new week turned out to be calm, but the market may face several unexpected decisions and events. This week will feature various events, as I've mentioned in previous articles, that have the potential to impact the market's mood significantly. Of course, the Bank of England, ECB, and Fed meetings are first and foremost. I previously stated over the weekend that it would be appropriate for the ECB and the Bank of England to continue raising interest rates by 75 basis points, which is the same rate as at the previous meeting. But several studies and economist surveys indicate that all three central banks can raise interest rates by 50 basis points. A few weeks ago, such a turn of events might have warranted some skepticism, but not anymore.
Analysts' and other agencies' predictions typically come true. It rarely happens that the market correctly predicts the central bank's future course of action. This is because a few weeks before the meeting, the bank's representatives start preparing the market for this decision. This is the situation, at least in the case of the Fed. Members of the ECB and the Bank of England made significantly fewer comments, but even in them, one could detect the hesitation to increase the rate by another 75 points. In Europe and the UK, there are concerns about a recession. In the USA, people are also afraid of it. However, based on the state of these nations' economies, neither the United States, the European Union, nor Britain has much fear of it. If not, how else can we explain the sluggish pace of tightening monetary policy in the EU and Great Britain at a time when inflation hasn't even started to decline?
In America, Finance Minister Janet Yellen said on Monday that the American economy could face a recession in 2023. However, she believes that it is not a bad thing because there is maximum employment in the nation. She pointed out that the country did not currently require such high growth rates because the economy recovered quickly from the pandemic. The Fed will continue to take all necessary measures to ensure that inflation declines and economic growth are slow because bringing inflation to target levels is of far greater importance. The most crucial factor, according to Yellen, is preventing job losses. After inflation slows down, economic growth can resume. Recession is thus a possibility in the US, but it's more likely in the UK and the EU. The US dollar should take advantage of this opportunity.
I conclude from the analysis that the upward trend section's construction has grown more intricate and is almost finished. As a result, I suggest making sales with targets close to the estimated 0.9994 level, or 323.6% Fibonacci. The likelihood of this scenario is increasing, and there is a chance that the upward portion of the trend will become even more extended and complicated.
The construction of a new downward trend segment is predicated on the wave pattern of the Pound/Dollar instrument. I cannot advise purchasing the instrument at this time because the wave marking permits the construction of a downward trend section. With targets around the 1.1707 mark, or 161.8% Fibonacci, sales are now more accurate. Thus, I advise sales with targets located near the estimated 0.9994 mark, which corresponds to 323.6% Fibonacci.
