(News Bulletin 247) – The Euro remained close to perfect parity with the Dollar, with risk appetite contracting further after the publication of US inflation figures yesterday, and the potential for “remuneration” between the two currencies tilted even more in favor of the Dollar, with the prospect now quite clear of a new tightening of a magnitude of 75 basis points on the Fed Funds at the end of the month.
In detail, prices gained monthly (month on month) 1.3% in June, against 1.0% in May. Excluding food and energy (volatile elements), prices increased by 0.7% in June, against +0.6% in May. Over the past 12 months, prices, in their broadest sense, have jumped 9.1%. What drastically reduce the probabilities of a 50 bp hike in the Fed Funds at the end of the month, to the benefit of the probabilities of a new tightening of the screw by 75 bps.
To follow as a priority on the statistical agenda this Thursday, the producer price index in the United States at 2:30 p.m. The program tomorrow will be even busier with major statistics, likely to cause delays: retail sales, and consumer sentiment (U-Mich) for the sacrosanct domestic consumption, and the monthly report on industry and the barometer manufacturer Empire State for the secondary sector of the world’s largest economy, whose probabilities of going through recession at the turn of 2023 are increasing.
The Treasuries 10-years flirted again with 3% at 2.982.
At midday on the foreign exchange market, the Euro was trading against $1.0020 about.
KEY GRAPHIC ELEMENTS
A “contrarian” attitude (against the current) is to be adopted to play the scenario of a powerful rebound of contestation in the direction of the 50-day moving average (in orange), without doubting the bearish framework of bottom. The stop is clearly identified, very close, just below parity.
MEDIUM TERM FORECAST
In view of the key graphic factors that we have mentioned, our opinion is positive in the medium term on the Euro Dollar (EURUSD) parity.
Our entry point is at 1.0018 USD. The price target of our bullish scenario is at 1.0349 USD. To preserve the capital invested, we advise you to position a protective stop at 0.9997 USD.
The expected return of this Forex strategy is 331 pips and the risk of loss is 21 pips.
CHART IN DAILY DATA
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