EUR/USD: No immediate satisfactory entry point

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(News Bulletin 247) – The Euro continued its rebound against the Dollar on Tuesday, within narrow margins, in a context of very low risk appetite. The slightly more offensive attitude of the ECB will have made it possible to develop a quite relative bullish extension below the 50-day moving average (in orange). As a reminder, the European Central Bank plans to exit negative rates at the end of the third quarter, said its president, Christine Lagarde. The European institution is tightening its monetary policy in the face of the acceleration of the rise in prices in the euro zone. Not yet enough to make the Euro more attractive than the Dollar on the foreign exchange market, but enough to provide fertile ground for a rebound, already initiated on technical bases.

In terms of statistical figures on Monday, operators noted better-than-expected progress in the IFO business climate index in Germany, the leading economic power in the Euro Zone. The index rose to 93 points, but remains far from the high points of the last 12 months, at 101. This Tuesday, it is already much denser on the macroeconomic front, with the traditional data flash PMI activity indicators (Markit) for the current month. For the Euro Zone data, we are slightly below expectations, at 56.3 for services and 54.4 for industry.

Chris Williamson, Chief Business Economist at S&P Global Market Intelligence, commented on these latest figures through the lens of inflation: “While inflationary pressures may have plateaued, as suggested by a second consecutive slowdown in the rise in prices paid as well as signs of easing supply difficulties, they nevertheless remain very high, remaining at near-record levels. Such price pressures, coupled with the reassuringly strong GDP growth evidenced by the PMI data, will likely prompt the European Central Bank to tighten monetary policy soon..”

On the Fed side, for Vincent Boy (IG France), “the tone is still on the tightening of monetary policy, but fears of recession could change the discourse in the coming months. We expect at least two rate hikes of 50bp during of the next FOMC, but it is very likely that the Fed will then decide to take a break, so as not to worsen the economic situation.

Equivalent activity indicators will be published for the United States at 3:45 p.m.

At midday on the foreign exchange market, the Euro was trading against $1.0710 about.

KEY GRAPHIC ELEMENTS

The underlying trend remains bearish, but the absence of an interesting entry point makes it impossible to position oneself serenely. Below the 50-day moving average (in orange), with unchanged bearish tilt, the picture remains bleak in any case.

MEDIUM TERM FORECAST

In view of the key graphic factors that we have mentioned, our opinion is neutral in the medium term on the Euro Dollar (EURUSD).

We will maintain this neutral opinion as long as the Euro Dollar (EURUSD) parity prices are positioned between the support at 1.0454 USD and the resistance at 1.0758 USD.

CHART IN DAILY DATA

©2022 News Bulletin 247

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