02 November 2022, EUR/USD
EURUSD trading plan:
The U.S. central bank has hiked interest rates aggressively this year to fight inflation. Curve inversions essentially reflect traders' expectations that the Fed will need to cut rates later on to help an economy hurt by higher borrowing costs. Yields on two-year Treasuries have been significantly above those of 10-year Treasuries since early July. Other parts of the curve that the Fed sees as more reliable warnings an economic contraction is expected have also inverted, or have flattened significantly, in recent weeks. A flattening curve can mean investors expect near-term rate hikes and are pessimistic about economic growth further ahead. This is a negative signal for the US currency.
Investment idea: buy 0.9870 and take profit 0.9950.