(News Bulletin 247) – The Euro remained in great difficulty against the Dollar on Monday, confirming the early end of its technical rebound against the Dollar, in particular because of the disappointment caused by the publication, in final data, of the industrial PMI German, came out at 47.8, against 48.3 in the first estimate. An activity indicator that alone militates for the imminent entry into recession of the first economy in the Euro Zone.
Phil Smith, Economics Associate Director at S&P Global Market Intelligence, coolly commented on the figures: “Soaring energy prices have ended the slowdown in input cost inflation seen in recent months, the leading to a reacceleration in September. If demand continues to fall in the coming month as companies expect, sustaining higher costs will inevitably become increasingly more difficult, which will mechanically squeeze margins. Indeed, we We’re already getting reports of some manufacturers trying to improve cash flow by depleting inventory from purchases.”
The risks of recession, particularly in the Euro Zone, in a tense monetary environment, continue to constitute the general matrix of the market, favorable to safe havens, in this case the Dollar.
As a reminder on Friday, the consumer price index in the Euro Zone, in very first estimates for the month of September, again surprised unpleasantly. Inflation is once again stronger than market expectations. It is even in double digits (+10%) for the whole of the monetary union on an annual basis, on the widest basket of products (energy, food, alcohol and tobacco included). As a reminder, in August, inflation was 9.1%. As for the main components of inflation in the euro area, energy is expected to experience the highest annual rate in September (40.8%, compared to 38.6% in August), followed by food, alcohol & tobacco (11.8%, compared to 10.6% in August), industrial goods excluding energy (5.6%, compared to 5.1% in August) and services (4.3%, compared to 3.8% in August). This level of inflation is quite simply a historic record in the Euro Zone.
To follow the US manufacturing ISM PMI at 4:00 p.m.
At midday on the foreign exchange market, the Euro was trading against $0.9770 about.
KEY GRAPHIC ELEMENTS
The Euro challenge bounce, developed on September 28 and 29 in significant volatility, is already showing signs of running out of steam as it approaches the 20-day moving average (in dark blue). We would prefer to stay out of the spot as long as the signs of a return to the downward trend are not clearer, however. Particularly with regard to the positioning of the 50-day moving average (in orange), a particularly valuable benchmark since mid-February.
MEDIUM TERM FORECAST
In view of the key graphic factors that we have mentioned, our opinion is neutral in the medium term on the Euro Dollar (EURUSD).
We will maintain this neutral opinion as long as the Euro Dollar (EURUSD) parity prices are positioned between the support at 0.9500 USD and the resistance at 0.9890 USD.
CHART IN DAILY DATA
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