(News Bulletin 247) – The Euro, a “risky” currency, remained in difficulty against the “safe haven” Dollar, in the second half of a week marked by very important figures on American employment. After the ADP firm’s survey on Wednesday and the weekly registrations for unemployment benefits, it is the turn of the NFP (Non Farm Payrolls) report this Friday to focus attention in the trading rooms. The challenge is to measure the dynamics of the tensions on the American labor market, tensions themselves generating inflation.
“The risk of a hard landing for the economy caused by too much tightening increases and that for the next few weeks, for the next few months, the behavior of the markets will be dictated by the evolution of inflation”, summarize the strategists of Crédit Mutuel AM.
This inflation would get more carried away in the event of entry into a price/wage spiral in the United States, a scenario that has not yet been completely ruled out.
What are the expectations for the publication of the NFP, on employment in the private sector (excluding agriculture), at 2:30 p.m.? The unemployment rate is expected to be stable at 3.7% of the active population. Wages are expected to rise by 0.3% – it was incidentally the score for August. And job creations at 248,000, against 315,000 in August.
Furthermore, the impact of the cost of real estate on the cost of living across the Atlantic cannot be overlooked, even if the statistical news is empty on this front today. Vincent Manuel Manuel, Chief Investment Officer, Indosuez Wealth Management, warns: “Housing prices (30% of the basket of goods used to calculate the CPI) remain a major concern, as falling housing prices Real estate feeds into the housing component of inflation with a 15-month lag, and as 30-year mortgage rates hit 6%, more Americans are turning to the rental market, pushing rising price.”
To be statistically complete, the single currency suffered this morning from the publication of a stronger than expected contraction in industrial production.
At midday on the foreign exchange market, the Euro was trading against around $0.98.
KEY GRAPHIC ELEMENTS
We resume our bearish work on the Euro/Dollar currency pair, with a suitable entry point, following pullback on parity AND 50-day moving average. With the advantage of having a level of stop-loss clearly defined, which mechanically raises the quality of the money management associated with the operation.
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 0.9802 USD. The price target of our bearish scenario is at 0.9401 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 401 pips and the risk of loss is 199 pips.
CHART IN DAILY DATA
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