(News Bulletin 247) – The Euro/Dollar remained close to perfect parity, in a nervous market atmosphere, marked by a contraction in risk appetite after stronger than expected US inflation figures, published in heart of the week. Some members of the Fed Board were reassuring, however, rejecting for the time being the idea of ​​a 100bp tightening of the screw at the end of the month, after the next FOMC meeting.
In terms of statistics on the American side yesterday, whether for the producer price index, showing signs of marked overheating, or weekly registrations for unemployment benefits, significantly missing the target, the signals were not very encouraging.
“The monetary policy gap between the ECB and the Fed should narrow, one advancing a tightening program the other perhaps reaching a turning point in the face of a less vigorous economy”, for Brigitte TROQUIER (Promepar AM, the management boutique de la BRED) “But the opening of spreads within the EMU, recent political developments in France or Germany could in turn weigh on confidence and an exchange rate that is already flirting with parity of 1 for a 1.”
To follow in priority on the statistical agenda this Friday, retail sales, and consumer sentiment (U-Mich) for the sacrosanct domestic consumption, and the monthly report on industry and the manufacturing barometer 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.
At midday on the foreign exchange market, the Euro was trading against $1.0025 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 1.0026 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 0.9949 USD.
The expected return of this Forex strategy is 323 pips and the risk of loss is 77 pips.
CHART IN DAILY DATA
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