(News Bulletin 247) – The Euro continued to suffer below perfect parity against the Dollar, at around $0.9920, as the opening of the Jackson Hole symposium approached, and the day after the publication of barometer indicators contrasting activity in the Euro Zone, and disappointing in the United States, particularly in the services component.
Tomorrow opens a major meeting to be followed carefully by the community of forex traders: the Jackson Hole symposium, named after this valley in Wyoming where the world’s great financiers meet annually. A very special meeting this year, after the start of an upward inflection in key rates on both sides of the Atlantic. J. Powell, Chairman of the Fed, will give a speech on Friday, and the degree of firmness of his tone will have a more or less significant impact on the evolution of the Dollar, whose fundamental bullish bias against the Euro is undisputed.
“The markets are confronting the reality of a monetary policy which will be durably restrictive”, observes Sébastien GRASSET (Auris Gestion). “If in 2021, J. Powell’s speech in Jackson Hole warned of the risks of a premature tightening, it […] seems highly unlikely, given the context, that this year’s speech will have a ‘dovish’ character.”
A symposium which “will offer Jerome Powell and his counterparts a new forum to explain the importance of ensuring the anchoring of inflationary expectations”, for the strategists of BNP Paribas AM. “This anchoring is all the more important since, although it is likely that the energy supply difficulties will cause a marked slowdown in activity in the euro zone in the second half after a good resistance in growth in the first half, the US economy is not expected to experience a recession, i.e. a phase of below-potential growth, until 2023.”
To follow the sales of housing in progress at 4:00 p.m. and crude stocks at 4:30 p.m., across the Atlantic. To be followed earlier in the day, an hour before the opening of Wall Street, durable goods orders at 2:30 p.m.
At midday on the foreign exchange market, the Euro was trading against $0.9920 about.
KEY GRAPHIC ELEMENTS
Below the 50-day moving average (in orange), major dynamic resistance, the underlying trend is experiencing further development, with the now validated break of the perfect parity (1 Dollar per Euro), a highly psychological threshold. The opinion remains negative below this threshold, pending the appearance of signs of a technical rebound.
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 0.9930 USD. The price target of our bearish scenario is at 0.9701 USD. To preserve the invested capital, we advise you to position a protective stop at 1.0001 USD.
The expected return of this Forex strategy is 229 pips and the risk of loss is 71 pips.
CHART IN DAILY DATA
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