(News Bulletin 247) – The Euro remained under pressure against the Dollar, below perfect parity, as the opening of the Jackson Hole symposium looms, a traditional annual high mass of the world’s great central bankers. J. Powell will give a speech there tomorrow, and any element of language leaning towards a tougher tone will benefit the Dollar, whose potential for “remuneration” against the Euro will be further reinforced. The Euro, for its part, as a barometer of risk appetite, remains in difficulty while energy prices, particularly gas, raise fears of the Euro Zone tipping into recession.
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, while 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.”
Asked about BFM Business, Patrick Artus, chief economist at Natixis, describes as an “end of winter” subject the hypothesis of a recession caused by Russian gas, whose stocks are still sufficient, particularly in France (88%) .
In terms of statistics, currency traders made up yesterday with durable goods orders (0.0%), which completely missed expectations (+0.9%) on a monthly basis for the month of July, according to the latest figures from the Census Bureau. Ongoing home sales continued to decline, albeit at a slower pace than expected, as did crude inventories.
To follow the weekly registrations for unemployment benefits and the preliminary data of the American GDP at 2:30 p.m. In the immediate future, it is the IFO index of the business climate in Germany, the leading economy in the Euro Zone, which provides some relief by widening its loss by only 0.2 points, well beyond a target pessimistic.
“A gloomy mood hovers over the German economy,” reads the institute’s press release. “The ifo business climate index fell in August to 88.5 points, compared to 88.7 points in July. Companies are a little less satisfied with their current activity and the strong pessimism of their prospects for the coming months is almost unchanged. Uncertainty among businesses remains high and the German economy as a whole is expected to contract in the third quarter.”
At midday on the foreign exchange market, the Euro was trading against $0.9975 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 0.9973 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 1.0101 USD.
The expected return of this Forex strategy is 272 pips and the risk of loss is 128 pips.
CHART IN DAILY DATA
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