If anyone finds the Fed's job difficult, look at the ECB. It was really in an unenviable position. Russia's refusal to supply gas through the Nord Stream pipeline turned into a 35% increase in futures for blue fuel and a collapse in EURUSD to a 20-year bottom. The central bank, dissatisfied with this, has its hands tied because if it starts to raise rates sharply, a recession cannot be avoided. If gradualism is used instead of decisiveness, the euro will continue to fly into the abyss, import prices will rise by leaps and bounds, and inflation will most likely begin to be measured in double digits.

The US Labor Market Report for August showed that the Fed is doing its job effectively. Employment increased by 315,000, which was the worst dynamics of the indicator in 16 months. Unemployment increased from 3.5% to 3.7%, while the average wage, on the contrary, slowed down from 5.6% to 5.2%. A very hot market showed the first signs of cooling, which is what the Fed needs to beat inflation. The fight will be tough but the deteriorating labor market, coupled with a slowdown in consumer prices, is a sure sign that a 75 bps increase in federal funds rates is not needed in September. Why go overboard? If so, then the US dollar should take a step back.

At first glance, the euro is able to provide decent resistance to the dollar. Bloomberg experts predict that the deposit rate will rise by 75 bps at the meeting on September 8 and will rise higher than respondents expected in July—up to 1.5%. The derivatives market expects to see it almost at the level of 2.5%. Under such conditions, the yield of European bonds, that is, their attractiveness, should grow. Due to the flow of capital to Europe, the euro should strengthen.

ECB Deposit Rate Forecasts

Due to Russia's unwillingness to resume the work of the Nord Stream, the harmonious plan collapsed like a house of cards. Gas prices have soared by 35%, the EU is considering how to limit its growth, and Germany is adding a €65 billion fiscal package for those affected by the energy crisis. Alas, ING believes that stimulus will not be enough to avoid a recession, and the direct restriction of the cost of blue fuel and the suspension of futures trading look ineffective. How long can administrative measures against the market last?

While European storage occupancy is growing faster than expected, if Russia does not restart Nord Stream, there will be enough stock for 2–2.5 months. Then it will be really bad. And this circumstance makes it possible for Goldman Sachs to predict a fall in EURUSD to 0.95. RBC Bluebay Asset Management believes that the level will be reached in the near future.

Technically, on the EURUSD daily chart, only the return of the pair to the lower border of the fair value range of 1–1.037, followed by the activation of the false breakout pattern, will allow us to talk about buying. Until this happens, it makes sense to sell the pair with a target of 161.8% according to the AB=CD pattern.