EUR/USD: Powell in front of the Senate, before the PMIs tomorrow

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(News Bulletin 247) – The Euro remained under pressure against the Dollar on Wednesday at midday, even though the rebound of the main equity indices in France and Germany was prematurely exhausted, and J. Powell, President of the Fed , will have to face the Senators this Wednesday, in the first part of the semi-annual hearing before the American parliamentarians. It will have to provide the necessary justification for a particularly tight monetary turn, at the risk of weighing heavily on growth.

And this even as “households anticipate more and more lasting inflation”, as noted by analysts at Lazard Frères Gestion. As a reminder, the Fed raised the Fed Funds 7 from 5 points low just a week ago. William Gerlach, Country Manager France at international payments player iBanFirst, notes that this is “the biggest increase since 1994”. “This reflects a sense of panic within the central bank as inflation creeps dangerously close to the symbolic 10% threshold (which should be reached within a few months, according to [iBanFirst]).”

Yesterday in terms of statistics, very little to eat, apart from sales of existing homes in the United States for the month of May, which came out almost perfectly in line with expectations, at 5,410,000 units. The agenda becomes denser tomorrow with a flurry of activity indicators (PMI IHS in data flash for June) and weekly registrations for unemployment benefits.

At midday on the foreign exchange market, the Euro was trading against $1.0525 about.

KEY GRAPHIC ELEMENTS

The failure at the contact of the 50-day moving average (in orange) is now recorded, and the bearish targets in the direction of $1.0350 and $1.0250 are locked. A close at the weekly lows in week 23 reinforced the bearish message. A new contact with the aforementioned trendline would further strengthen the quality of the entry point.

MEDIUM TERM FORECAST

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

Our entry point is at 1.0525 USD. The price target of our bearish scenario is at 1.0251 USD. To preserve the capital invested, we advise you to position a protective stop at 1.0607 USD.

The expected return of this Forex strategy is 274 pips and the risk of loss is 82 pips.

CHART IN DAILY DATA

©2022 News Bulletin 247

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