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December 13th - According to sources, trade negotiators from India and the EU are no longer optimistic that they can finalize a trade agreement by the end of this year. The sources say negotiations may now extend into next month, with both sides still hoping to reach an agreement to announce when European Commission President Ursula von der Leyen leads a delegation to New Delhi in January. The sticking points appear to be in sensitive sectors such as automobiles and steel. Some sources indicate that the EU wants India to increase its quota of approximately 80,000 vehicles that can be exported to India in exchange for reduced tariffs. Meanwhile, the Indian government is seeking to ease tariffs on some steel exports to the EU and wants flexibility regarding EU carbon tax regulations.On December 13, it was reported that on December 11 local time, the Venezuelan National Assembly approved the "Law on Support for Palestine and Humanity," which abolishes the Rome Statute of the International Criminal Court, marking Venezuelas decision to withdraw from the International Criminal Court.Intercontinental Exchange: In the week ending December 9, diesel speculators reduced their net long positions by 7,954 contracts to 58,578 contracts.On December 13th, a French presidential official stated on Friday that Ukraine, the United States, and European countries are still working to find a common ground to outline a peace agreement, including security guarantees for Kyiv, which could be submitted to Russia for consideration. The official told reporters at a press conference, "Our goal is to establish a solid common foundation for the negotiations. This common ground must unite Ukrainians, Americans, and Europeans. This should enable us to jointly propose a negotiating offer, a solid and lasting peace proposal that respects international law and Ukraines sovereign interests, a proposal that the US negotiators are willing to present to Russia." The official stated that there is currently no joint document, but the parties will negotiate through various phone calls and meetings in the coming days. He did not disclose whether Washington had set a deadline. He also revealed that a Ukraine meeting would not be held in Paris on Saturday.French presidential official: There is still no joint document between Ukraine, Europe, and the United States.

EUR/USD Recovers from 50-Day SMA as US NFP Report Is Released

Drake Hampton

Apr 01, 2022 10:17

Discussion Points Regarding the EUR/USD Rate

The EUR/USD is struggling to hold its gains from earlier this week after testing the 50-Day SMA (1.1173), and new data prints from the US may weigh on the currency, as the US Non-Farm Payrolls (NFP) report is expected to show more improvement in the job market.

 

With the US NFP report on the horizon, the EUR/USD is reversing from its 50-day moving average.

 

EUR/USD falls from a new weekly high (1.1185) as European Central Bank (ECB) Chief Economist Philip Lane calms speculation about a monetary policy shift, stating that "the degree of monetary policy stimulus put in place to address the pre-pandemic challenge of persistent below-target inflation can be gradually normalised towards a more neutral setting."

 

Lane continues, "the calibration of net purchases for the third quarter will be data-dependent and reflect our evolving assessment of the outlook," implying that the Governing Council is not in a hurry to normalize monetary policy, as the board member insists that "any adjustments to our interest rates will be gradual."

 

As a result, diverging monetary policy paths may continue to produce headwinds for EUR/USD as the Federal Reserve plans to implement a series of rate hikes over the coming months, and the NFP report may push the central bank to normalize monetary policy at a faster pace as the economy is expected to add 490K jobs in March.

 

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At the same time, the unemployment rate is expected to fall to 3.7 percent from 3.8 percent during the same period, the lowest reading since February 2020, and this development may force the Federal Open Market Committee (FOMC) to adjust its exit strategy at the next interest rate decision on May 4, as the central bank "expects to begin reducing its holdings of Treasury securities, agency debt, and agency mortgage-backed securities at a coming meeting."

 

Until then, the EUR/USD may struggle to maintain its gain from the yearly low (1.0806) as the FOMC normalizes policy ahead of its European counterpart, while the retail mood tilt appears certain to continue, as traders have been net-long the pair since the middle of February.

 

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The number of traders net-long is 9.25 percent greater than yesterday and 10.55 percent lower than the previous week, while the number of traders net-short is 16.67 percent lower than yesterday and 1.78 percent lower than the previous week. The decrease in net-long interest has reduced crowding behavior, as 63.95 percent of traders were net-long EUR/USD earlier this week, while the decrease in net-short position comes as the currency manages to test the 50-Day SMA (1.1173).

 

Having said that, the EUR/USD may continue to pull back from the moving average as the US NFP report is expected to show further improvement in the labor market, and the advance from the yearly low (1.0806) may turn out to be a correction in the broader trend given the ECB and FOMC's diverging paths.

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