(News Bulletin 247) – While equity markets on both sides of the Atlantic slowed their rally approaching the resistance level, and the barrel of crude continued to decline, the Euro / Dollar, also a marker of risk appetite, remained under the graphic pressure of its 50-day moving average (see more bottom partly technical).
On the statistical side, after the reassuring feeling caused by the publication of the American consumer confidence index (U-Mich, preliminary data) on Friday, it’s a cold shower on Monday, with a plunge in the manufacturing index Empire State, at -31.3. The following additional information can be read in the statement from the NY Fed: “New orders and shipments plunged, and order books thinned. Delivery times remained stable for the first time in nearly two years and inventories rose slightly Labor market indicators showed a slight increase in employment, but a decline in the average workweek Although still high, the price paid index fell and the price received index remained stable. Looking ahead, businesses do not expect much improvement in economic conditions over the next six months.”
To be monitored this afternoon for the United States: housing starts and building permits at 2:30 p.m. as well as the monthly federal monthly report on industry at 3:15 p.m. In the immediate term, the decline is accentuated due to the widening, in negative territory, of the ZEW index of confidence in the German economy, to -55.3, lacking expectations, however highly pessimistic.
Dr. Michael Schröder, ZEW researcher and head of the survey, provided the following insights: “ZEW economic expectations are falling slightly again in August after a sharp drop in the previous month. Financial market experts therefore expect a further decline in already weak economic growth in Germany.Continued high inflation rates and expected additional costs for heating and energy lead to lower earnings forecasts for the household consumption sector. for the financial sector are improving due to the assumed further increase in short-term interest rates.”
As a reminder, the ZEW index (called by contraction ZEW) is a barometer, published by the Zentrum fur Europaische Wirtschaftsforschungcalculated after analysis of a past survey of 300 German analysts and institutional investors, on their view of the German economy six months from now.
At midday on the foreign exchange market, the Euro was trading against $1.0130 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.
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 1.0137 USD. The price target of our bearish scenario is at 0.9801 USD. To preserve the invested capital, we advise you to position a protective stop at 1.0226 USD.
The expected return of this Forex strategy is 336 pips and the risk of loss is 89 pips.
CHART IN DAILY DATA
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