(News Bulletin 247) – The Euro remained stuck on perfect parity against the Dollar, in an infertile soil for risk appetite, while the prospect of seeing the ECB raise its rates by 75bp at the end of the next Board of Governors takes shapein an inflationary context exacerbated by the gas shock.
As a reminder, the latest inflation figures published this week agree with the firm tone of the latest report from the Board of Governors of the European Central Bank.
The consumer price index in the monetary union accelerated beyond expectations, +9.1% at an annualized rate. Excluding food, energy, alcohol and tobacco (volatile elements), prices rose by 4.3%, against 4.1% expected, causing pressure on all risky asset classes, family including the Euro is a prominent representative…
Currency traders will now turn nervously to THE statistical publication of the day, namely the monthly federal report on employment in the private sector (excluding agriculture). The content of the report, in particular the dynamics of wages, will be scrutinized at 2:30 p.m., to measure the persistence of tensions on the labor market, a source of inflation…
On Wednesday, the private HR firm Automatic Data Processing highlighted 132,000 job creations in the private sector (excluding agriculture), completely missing the target.
“The labor market is still very tight because many players have not yet returned to the job market after the Covid crisis: the number of Americans who are not looking for work is to nearly 19.9 million, compared to 19.1 million in 2019”, note the strategists of OFI AM.
Yesterday, the manufacturing PMI (ISM) came out at 52.8, slightly above expectations. On this side of the Atlantic, on the other hand, the battery of industrial PMI indicators came out in line with expectations for the whole of the Euro Zone, slightly disappointing for Germany. The indicator is nevertheless below the 50 point mark, at 49.6, which marks a contraction in secondary activity.
At midday on the foreign exchange market, the Euro was trading against $1 about.
KEY GRAPHIC ELEMENTS
The bottom bias remains powerfully bearish, below a 50-day moving average (in orange) which exerts significant chart weight. In the immediate future, nervous oscillations around the parity are considered. Note the downward acceleration of the aforementioned background trend curve. The closer the 20-day moving average gets to the 50-day moving average (in orange), the more attractive the bearish entry point looks to us.
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) parity.
Our entry point is at 1.0004 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 1.0091 USD.
The expected return of this Forex strategy is 303 pips and the risk of loss is 87 pips.
CHART IN DAILY DATA
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