(News Bulletin 247) – Risk appetite continued to deteriorate, due to new nervous movements on long rates in the United States, Treasuries 10 years crossing the 3% mark, against a backdrop of persistent concerns about inflation. Currency traders will also have an interesting benchmark on Friday with the various CPI (consumer price index) across the Atlantic. The challenge is that of estimating the degree of aggressiveness of the Fed in the months to come… In the immediate future, this appetite for risk of which we spoke above, contracts: the barometers that are the markets stocks and the Euro/Dollar converges on the same idea.
“The Fed (American Central Bank) will not be able to mitigate the “overheating” of its economy without causing a marked slowdown”, warn the strategists of Groupama AM. “Barring a surprise easing on energy, this context of mistrust and tension on rates should remain in place at least until the ECB meeting on Thursday when the markets are awaiting clarification on the intensity and timing of the next hikes. rates”, for Alexandre BARADEZ (IG France) The outcome of the ECB Board of Governors is expected Thursday at 1:45 p.m. The traditional press conference will follow at 2:30 p.m.
The unpleasant macroeconomic surprise of the day is definitely the dynamics of orders to German industry, which contracted by 2.7% in April on a monthly basis, completely missing expectations. As a reminder in March, the contraction amounted to -4.2% (updated figures).
At midday on the foreign exchange market, the Euro was trading against $1.0670 about.
KEY GRAPHIC ELEMENTS
the spot has just fallen below its 50-day moving average (in orange), a bottom trend line with a persistent bearish bias. A daily candle close well below the low shadow of Tuesday’s 05/31 candle would further flesh out the bearish scenario. The opinion therefore remains bearish but without a clear sign at this stage of a potential increase in volatility. The stop is clearly identified, just above the weekly highs (week 22) reached on Monday 05/30.
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 1.0666 USD. The price target of our bearish scenario is at 1.0455 USD. To preserve the invested capital, we advise you to position a protective stop at 1.0776 USD.
The expected return of this Forex strategy is 211 pips and the risk of loss is 110 pips.
CHART IN DAILY DATA
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