(News Bulletin 247) – The Euro Dollar continued to lose ground, at the dawn of a busy week on the statistical level (see below), under the cumulative effect of the rise of a notch in geopolitical tensions since the humiliation suffered by V. Putin after the damage suffered by the bridge connecting Russia and Crimea, and the publication of the federal employment report on Friday, showing tensions ruling out the idea of a break for the moment in warlike monetary policy (hawkish) from the Fed.
With regard to the main lessons of this NFP (Non Farm Payrolls), the dynamics of wage increases did not get carried away (+0.3% month-on-month in September), but the increase in job creations in the private sector (excluding the agricultural sector) surprised by its pace, at +263,000. The unemployment rate – this was not in the Fed’s plans either – contracted sharply to 3.5% of the active population, against a consensus of 3.7%. The change in total non-farm payroll employment for July was revised up by 11,000 from +526,000 to +537,000, and the change for August remained at +315,000. Employment in July and August combined was 11,000 higher than previously reported.
“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.
As seen in the preamble, the week will be dense and rich in statistical terms, with, among other publications, able to shift the spot EURUSDItalian production tomorrow, the Minutes the Fed on Wednesday, consumer prices in the United States on Thursday, and the consumer confidence index (U-Mich) on Friday.
In the immediate future, the Sentix index of investor confidence in the Eurozone, published this morning, sank to -38.3, lacking yet pessimistic expectations, at the lowest since June 2020. “The persistent uncertainties on the The gas and energy situation in the winter has not diminished due to the attack on the Nordstream pipelines.In addition to economic worries, there is now also a growing likelihood of an escalation of the military conflict in Ukraine. , there is little reason to hope”, can we read on the cold and laconic commentary accompanying the publication of the firm specializing in behavioral finance.
At midday on the foreign exchange market, the Euro was trading against $0.9705 about.
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 clearly defined stop loss level, which mechanically increases 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 0.9706 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 0.9891 USD.
The expected return of this Forex strategy is 305 pips and the risk of loss is 185 pips.
CHART IN DAILY DATA
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