(News Bulletin 247) – The market psychology governing the Euro / Dollar currency pair remained unchanged on Friday, in a market not very inclined to risk taking, and which is already projecting towards Jackson Hole, the traditional annual high mass of the big moneymakers of the planet. Currency traders will try to pick out clues that will allow them to assess the rate of increase in federal rates for the coming months, in particular. J. Powell will give a speech there next Friday with the key to new indices allowing to anticipate the extent of the rise in Fed Funds for the September deadline: +50 or 75 bps?
In the immediate future, the parity has come dangerously close to the “perfect parity” (i.e. one dollar per euro), already reached as a reminder on 14 July. And this thanks to a rise in bond yields, Treasuries 10 years worth 2.93%, still a good distance away, however, from the 3% mark.
No major indicator is on the agenda for Friday’s session, and currency traders are digesting the latest indicators, on both sides of the Atlantic. Currency traders composed yesterday with the confirmation of the inflation record in the Euro Zone for the month of July, at +8.9% at an annual rate, on the widest basket of products. Excluding food, energy, alcohol and tobacco, price growth was confirmed at +4.0%. Across the Atlantic, weekly registrations for unemployment benefits, and the manufacturing index Philly Fed punctuated the session. These two indicators came out above expectations.
At midday on the foreign exchange market, the Euro was trading against $1.0070 about.
KEY GRAPHIC ELEMENTS
The bearish message is immediately reinforced by the attitude of the spot in contact with the 50-day moving average (in orange), resistance since February 23. This basic trend curve is also seeing its slope increase. It is a major technical benchmark as the reactions to its contact are lively and frank. Both dojis consecutive ones (August 16 and 17) were followed by a red candle with a particularly elongated body.
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 1.0059 USD. The price target of our bearish scenario is at 0.9801 USD. To preserve the capital invested, we advise you to position a protective stop at 1.0126 USD.
The expected return of this Forex strategy is 258 pips and the risk of loss is 67 pips.
CHART IN DAILY DATA
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