(News Bulletin 247) – By breaking through $1.0350, the Euro against the Dollar continued to characterize the drying up of risk appetite as the risks of an entry into recession in the Euro Zone and the States United States were taking shape, auguring a period of stagflation, a “swear word” for economists.
The latest activity barometer indicators in the monetary union, published this morning, confirm this. The services PMI in final data for the month of June came out at 53 points, barely above the first estimates, leaving a margin now tenuous with the 50 points which separate, by construction, an expansion from a contraction of the sector considered. . We therefore have the composite data (industry included), which comes out at 52.0 (54.8 in May), the lowest for 16 months.
Chris Williamson, Chief Business Economist at S&P Global Market Intelligence comments on the latest figures from the PMI survey: “The sharp slowdown in activity growth observed in June in the euro zone increases the risk of a contraction in the region’s economy in the third quarter June’s PMI is in line with a quarterly GDP increase of just 0.2%, the survey’s forward-looking indicators such as the new orders and sales indices outlook for activity, which is also trending downwards and thus presaging a decline in activity in the coming months.The manufacturing sector has already tipped into contraction territory, with production having fallen for the first two years in June, while activity in the services sector suffered a marked slowdown against a backdrop of soaring inflation and a consequent increase in the cost of living.
“The latest PMI data therefore underline a sharp increase in the risks of economic contraction in the euro zone even as inflationary pressures are easing but remain very marked”, he summarizes.
To make matters worse for the single currency against the safe haven Dollar, in the statistical chapter yesterday, the Sentix index of investor confidence in the Euro Zone deteriorated further, from -15.8 to -26.4, missing expectations. . And the producer price index in the Euro Zone came out at +0.7% in May, on a monthly basis.
To follow orders to US industry at 4:00 p.m.
At midday on the foreign exchange market, the Euro was trading against $1.0300 about.
KEY GRAPHIC ELEMENTS
the spot is breaking a fragile neck line from a pattern chartist, which sends a clear bearish message. Our immediate objective is to achieve, in growing volatility, the perfect parity, namely one euro for one dollar.
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 1.0297 USD. The price target of our bearish scenario is at 1.0001 USD. To preserve the capital invested, we advise you to position a protective stop at 1.0401 USD.
The expected return of this Forex strategy is 296 pips and the risk of loss is 104 pips.
CHART IN DAILY DATA
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