Up and Down The information presented in this publication is provided purely for informational purposes and does not constitute investment advice, a sales offer, or a purchase solicitation, and under no circumstances should it serve as a basis or be considered as an encouragement to engage in any investment. The macro point There is good news and bad news this week. In the United States, inflationary pressures continue to slow down. The Producer Price Index (which rarely moves the currency market) came in at only 8% year-over-year in October. This is much lower than in September (8.5%) and less than the Bloomberg consensus expected (8.3%). After peaking last March at 11.7%, the decline in producer prices seems well established. This can be explained by several factors: lower demand due to reduced purchasing power, a significant drop in raw material prices, and an improvement in production chains (even though international transport congestion issues persist on the Pacific front due to China's zero-Covid policy). The drop in producer prices translates, after a lag of two to three months, into a drop in consumer prices. So, this is good news.This obviously fuels speculation in the foreign exchange market about a possible slowdown in the pace of rate hikes by the US Federal Reserve (Fed). Last Tuesday, Fed Vice Chair Lael Brainard (who is considered a dove, meaning in favor of a measured rate hike) indicated that the time is approaching for the central bank to slow down the pace of rate increases. "A lot has already been done," she recalled. We will certainly have to wait for the next US employment report (early December) and the November inflation report (also published in December) to know if the slowdown in rate hikes will materialize at the FOMC meeting on December 14 or rather during the first quarter of 2023.Across the Channel, the debate is different. The publication of inflation in October had the effect of a shock. The Consumer Price Index (CPI) reached its highest level since 1981 at 11.1% year-over-year. Everything is increasing, sometimes in large proportions. Food and beverage prices jumped 16.4% year-over-year (the largest increase since 1977). Without the recent measures taken to alleviate the energy bill, the ONS (the UK equivalent of the INSEE) considers that inflation would not have been 11.1% but rather 13.8%. For the poorest households, inflation is around 13.8%, while for the richest, it is around 10.5% (still according to ONS estimates). It's catastrophic. No need to mention that wage increases are not enough to offset the surge in prices. Before the publication of inflation, the foreign exchange market estimated that the probability of a 75 basis point rate hike in December by the Bank of England (BoE) was 65% against 35% for a 50 basis point hike. Since the publication of the CPI, expectations have changed. The market is now uncertain. 50% of traders believe the hike will be 50 basis points, and 50% believe it will be 75 basis points. In any case, the BoE certainly has no choice but to continue on its path and raise rates. A pause in monetary policy is not in the cards given the stratospheric level of inflation, regardless of the magnitude of the recession across the Channel.Finally, there is nothing new in the eurozone. Last week, Georg Muller, a member of the European Central Bank (ECB), merely reiterated that the institution is ready to further tighten its monetary policy. Two options are on the table: either a 50 basis point hike (which is the market consensus at this stage) or 75 basis points in December (if inflation remains high and widespread). The little novelty expected: the ECB should also discuss quantitative tightening (which involves reducing the central bank's balance sheet). This is a measure of monetary policy tightening that should help fight excess liquidity in the financial system (and thus indirectly reduce inflationary pressures).In the foreign exchange market, the euro rebounded this week against all its main counterparts (except the British pound). The EUR/USD reached a weekly high of 1.0480 – a level not seen since early July. This is an important resistance area. It could be tested again in the short term, but it is unlikely to be broken. Our central scenario for the coming sessions: the EUR/USD should trade within a relatively wide price range between 1.0280 (which acts as the main support) and 1.0480. It would take an excellent piece of economic news from the eurozone to see a sustained breakthrough of the 1.0480 area, which is not currently expected.The supports and resistances displayed below indicate the lows and highs within which prices should evolve during the week.SUPPORTSWEEKLYRESISTANCESWEEKLYS2S1R1R2EUR/USD1.01631.02801.04801.0584EUR/GBP0.83800.84760.88670.8998EUR/CHF0.94990.96610.99981.0149EUR/CAD1.33551.35671.39081.3996EUR/JPY140.28142.48146.87149.07This week will be shortened due to Thanksgiving in the United States (starting Thursday). This will lead to a significant drop in volumes across all financial markets, including the foreign exchange market. Sometimes, this can lead to erratic movements in certain pairs. We doubt this will be the case this year, unless geopolitics (meaning the war in Ukraine) takes center stage.At the statistical level, there are few notable indicators. The October durable goods orders and new home sales figures in the United States have little effect on prices. The IFO business climate index in Germany is the only notable statistic. It should confirm that the eurozone's largest economy has already entered a recession. To summarize: nothing new to expect this week on the economic front.Below you will find the publications and events expected to have a major impact on currency price movements.DAYTIMECOUNTRYINDICATORWHAT TO EXPECT?23/1114:30Durable Goods Orders (October)Rebound of 0.2% month-over-month after a 0.5% drop in September.16:00New Home Sales (October)Decline to 578k from 603k the previous month. The deceleration of the housing market is to be monitored.24/1114:30IFO Business Climate Index (November)Expected decline by analyst consensus to 83.3.25/1108:00Third Quarter GDP EstimatePrevious at 0.3%. Risk of contraction.