(News Bulletin 247) – Without auguring anything about any change of course, the Euro continued its rebound against the Dollar, a rebound that began just after reaching perfect parity (a first in almost 20 years). Currency traders, reassured by the remoteness of a scenario of a 100 bp increase in Fed Funds at the end of the month, are turning to Ms. Lagarde, President of the European Central Bank, who is completing a Board of Governors on Thursday.
“For the first time in nine years, the ECB has the courage to raise all key interest rates by 25 basis points,” notes Ulrike Kastens, Europe economist for DWS, who believes that “the bank will include in its announcement the normalization of monetary policy, i.e. further interest rate measures later this year. This tightening could be all the more pronounced as the announced program to combat the so-called fragmentation The existence of fragmentation, i.e. an “unwarranted widening of yield spreads”, is the subject of much debate. However, the ECB considers that a such an instrument is necessary to avoid a crisis situation like in 2011 and 2012.”
For the time being, currency traders have just taken note of the final consumer price data for June in the Euro Zone, with no deviation from the first estimates, at +8.6% at an annualized rate, food and energy included. To follow the housing starts and building permits for housing in the United States at 2:30 p.m.
At midday on the foreign exchange market, the Euro was trading against $1.0235 about.
KEY GRAPHIC ELEMENTS
We maintain our short-term bullish idea, in high volatility, towards the 50-day moving average (in orange). Downside risks (trends background) will take shape as the spot bottom on this trend curve whose role of resistance has been proven.
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 1.0253 USD. The price target of our bullish scenario is at 1.0483 USD. To preserve the invested capital, we advise you to position a protective stop at 1.0174 USD.
The expected return of this Forex strategy is 230 pips and the risk of loss is 79 pips.
CHART IN DAILY DATA
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