(News Bulletin 247) – The resurgence of fears of new restrictive measures in Europe, mainly in Germany, continues to weigh on the Euro. The Dollar, on the other hand, benefits from the appointment by the executive of J. Powell for his own succession at the head of the Fed – which has yet to be formally validated by the Chambers. He will be “flanked” by Lael Brainard, whose reputation as a dove is well established …
“The appointment of Jerome Powell at the head of the Fed is not a surprise in itself, that of Lael Brainard would have been, however,” observes John Plassard (Mirabaud). “The US government has decided to play for continuity by not taking any risk in the midst of monetary tightening.” New mandate, and new challenges for J. Powell:
“First of all […] federate the members within the FOMC in order to be able to have full powers and avoid that there are dissensions which are more and more obvious.Then Jerome Powell must obviously read the trajectory of inflation and employment in order to not to be behind the curve (behind the curve).”
In the health chapter, Austria applied the general confinement decided last week on Monday morning. The tone is particularly tough in Germany, where the Minister of Health, Jens Spahn, who did not rule out last week to resort to confinement decisions, went much further in the elements of language. He summed up in a chilling phrase the health situation in his country, faced with a resurgence of the epidemic: the Germans will be “vaccinated, cured or dead” by the end of winter because of the current outbreak of infections. to Covid-19 in the country, which no longer excludes compulsory vaccination.
Geopolitics also weighs on the risky asset that constitutes the Euro: “The emerging risks of an invasion of Ukraine by Russia worry the authorities in Europe and the United States”, warns Voncent Boy (IG France) . ‘The position on this is difficult for European countries because of their dependence on Russian gas, when prices are already very high. An intervention could lead to a halt or decrease in gas deliveries and put a little more pressure on prices. “
On the calendar side, November 24, tomorrow therefore, constitute the focal point of the week for currency traders, with PCE inflation data (Personnal Consumption Expenditures), the Fed’s preferred measure, preliminary Q3 US GDP data, and Minutes of the Fed, the traditional report of the last meeting of the Monetary Policy Committee. Very generous program, then, before a long break for Thanksgiving. Wall Street will close Thursday, and Friday’s session will be cut off.
In the immediate future, traders learned this morning of the very first estimates (flash data) of PMI activity indicators (surveys of purchasing managers). Both services and industry exceeded expectations at 56.6 and 58.6 respectively.
At midday on the forex market, the Euro was trading against 1,1270$ about.
KEY GRAPHIC ELEMENTS
We clarified the following on Wednesday, as a reminder: “A break in a fragile support zone at 1.1530 would increase volatility. The working band between $ 1.1530 and $ 1.1675 would then be obsolete.” This zone gave way, with validation by volatility. The current seller is thereby strengthened. Next bearish target locked at $ 1.1100. As a result, a sharp punctual reaction of protest will have to be considered.
MEDIUM-TERM FORECAST
In view of the key graphical factors that we have mentioned, our opinion is negative in the medium term on the pair Euro Dollar (EURUSD).
Our entry point is at 1.1264 USD. The price target for our bearish scenario is at 1.1001 USD. To preserve the committed capital, we advise you to position a protective stop at 1.1361 USD.
The expected return on this Forex strategy is 263 pips and the risk of loss is 97 pips.
DAILY DATA CHART
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Source: Tradingsat
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