Welcome to a new year that will hopefully bring us some positive news. We hope you have all had a good start to the new year and have recovered well over the festive period.
This year is not only a leap year, but also a year of elections. First and foremost, the U.S. election and its result in November will receive the most attention. We are also living in times of unrest, uprisings and wars, which could lead to a tsunami on the financial markets at any time. So be vigilant.
From a monetary policy perspective, what will this year bring?
This year will be dominated by interest rate cuts after central banks around the world initiated the most aggressive tightening campaign in decades during 2022 and 2023. Now, since inflation is seen to retreat, central bankers are poised to begin easing monetary policy again. The Federal Reserve will lead the pivot by lowering rates by 75bp in 2024 with the first cut expected to be in March. Both European Central Bank and the Bank of England are expected to cut rates in June.
Skeptics however warn, that the sources of inflation risk are wide while the central bank tools are narrow and that monetary policy did not have much to do with the post-pandemic price pressure, neither its slowing.
EUR/USD and GBP/USD
If we take a quick look at the technical picture in the euro and the cable, we can see that both currency pairs have tried to break out above the EMA200 average, but have not yet managed to do so. The short-term trend therefore remains sideways. Our attention is focused on a clear break above the EMA200 (blue line).
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Disclaimer: All trading ideas and expressions of opinion made in the articles are the personal opinion and assumption of MaiMarFX traders. They are not meant to be a solicitation or recommendation to buy or sell a specific financial instrument.
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