<p style=““ class=“text-align-justify“>The latest notes out of BofA says that we are now in the transition period from the 2022 bear narrative, that was encapsulated by „inflation shock, rates shock, recession shock“, and moving on to the 2023 bull narrative, which is „peak CPI, peak Fed, peak yields, and peak US dollar“.</p><p style=““ class=“text-align-justify“>In other words, we are heading into the sunset days of the tightening cycle by major central banks – at least in terms of what is being priced in. That’s a massive endorsement for risk trades, at least on paper.</p><p style=““ class=“text-align-justify“>But I think a question that needs to be addressed is what happens if inflation doesn’t just peak and fall, but instead it peaks and just plateaus at a high level? The market’s appetite for greed hinges a lot on the relief that inflation isn’t getting any worse but is it enough to sustain a more optimistic outlook if we don’t see a material fall in consumer prices back towards 2%?</p>

This article was written by Justin Low at forexlive.com.

<p style=““ class=“text-align-justify“>The pair was already looking vulnerable but we are starting to see things pick up now with a break below 140.00 and that marks a big psychological blow for buyers, who have held on to a more bullish outlook in the pair for the longest time.</p><p style=““ class=“text-align-justify“>This is the first time since the start of September that the pair has traded below 140.00 and the technical picture doesn’t look pretty whatsoever:</p><p style=““ class=“text-align-justify“>A fall back towards 135.00 is easily on the cards and we might even course correct towards the 200-day moving average next (blue line), considering how long it has been since the last meaningful technical correction in the pair.</p>

This article was written by Justin Low at forexlive.com.