Source: PaxForex Premium Analytics Portal, Fundamental Insight
The Preliminary Italian CPI for September is predicted to expand 0.3% monthly and 8.9% annualized. Forex traders can compare this to the Italian CPI for August, which rose 0.8% monthly and 8.4% annualized. The Preliminary Italian Harmonized CPI for September is predicted to rise 1.7% monthly and 9.5% annualized. Forex traders can compare this to the Italian Harmonized CPI for August, which increased 0.9% monthly and 9.1% annualized.
Financial markets closed a wild week last week with a massive sell-off on Friday, and traders should expect more volatility this trading week. US futures are pointing higher, but the Euro STOXX 50 Index could storm out of the gate with bulls and bears fighting for control. Eurozone inflation approaches 10%, and the energy crisis worsens as temperatures cool. While traders will focus on earnings, inflation, the slowing economy, and the growing cost-of-living crisis pose headwinds.
Trade data out of South Korea and Singapore showed a slowdown for September, which may result in weaker-than-expected third-quarter GDP data following two dismal quarters. Companies began warning about the impact of the surging US Dollar and weakening of other currencies, and Euro STOXX 50 companies with global exposure could mirror calls from their US counterparts. The light economic calendar to start the fresh trading week could extend trends from last week, and traders should expect wild swings in price action as borrowing costs increase and market participants attempt to figure out if peak inflation is behind us. Equity markets have more downside potential, as many fail to account for the potential of a long recession or period of stagflation.
The forecast for the Euro STOXX 50 Index remains bearish, but traders should expect more volatility as the third-quarter earnings season heats up. Price action stabilized at its horizontal support area, but the Tenkan-sen and the Senkou Span A of its Ichimoku Kinko Hyo Cloud continued to move lower, suggesting bears hold on to control. The Kijun-sen turned sideways, confirming that short-term downside pressures faded. Traders should monitor the CCI following its breakout from extreme oversold territory and push above the zero line. While it has more upside potential, should momentum fade on its push higher, a reversal could trigger a sell-off in price action. Can bears regain complete control over the Euro STOXX 50 Index and force this index into its horizontal support area? Subscribe to the PaxForex Daily Fundamental Analysis and earn over 5,000 pips per month.
Should price action for the Euro STOXX 50 Index remain inside the or breakdown below the 3,315 to 3,420 zone, PaxForex recommends the following trade set-up:
- Timeframe: D1
- Recommendation: Short Position
- Entry Level: Short Position @ 3.360
- Take Profit Zone: 3.000 – 3,055
- Stop Loss Level: 3.490
Should price action for the Euro STOXX 50 Index breakout above 3,420, PaxForex recommends the following trade set-up:
- Timeframe: D1
- Recommendation: Long Position
- Entry Level: Long Position @ 3.490
- Take Profit Zone: 3.605 – 3.675
- Stop Loss Level: 3.420
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