09 March 2022, EUR/USD
EURUSD trading plan:
Recession in EU may be the inevitable price for defending freedom, resisting aggression and upholding international law in Eastern Europe. The flattening EU government bonds yield curve indicated a heightened probability of a mid-cycle slowdown or end-of-cycle recession in the next year. The financial crisis in 2008/2009 and the pandemic in 2020/2021 were demand-side shocks that could be offset by lowering interest rates, buying bonds, cutting taxes and boosting unemployment insurance. But the sanctions are a supply-side shock that have cut the global economy’s production capacity so they cannot be offset in the same way. Boosting demand by more bond buying, cutting taxes or increasing government spending would simply worsen the production-consumption gap and fuel even faster inflation.
Investment idea: sell 1.0933 and take profit 1.0870.
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