(News Bulletin 247) – Fears of seeing the main European economic centers plunged into a historic energy crisis enter recession continue to put pressure on the Euro, the risky currency par excellence, against the safe haven Dollar. And this even if the resignation of Liz Truss and the hopes of easing the “Zero Covid” policy have made it possible to find some air, especially on the equity markets.
Beneath a 50-day moving average (in orange), whose pressure is as strong as it is precise, the currency pair continues its slide.
In short, the atmosphere remains cool both geopolitically and macroeconomically.
“The deterioration in the economic situation remains moderate for the moment, but the signs of a reversal are multiplying and the impact of the energy crisis has probably not yet fully made itself felt, thanks to government support measures,” says Julien- Pierre Nouen (Lazard Brothers Management).
Currency traders still have their eyes on the big central bankers, in the process of tightening the monetary tap.
“Everyone is hoping for a change in tone from Jerome Powell, the famous “pivot”, which would signal the end of suffering. Everyone is watching, but nothing is coming. The Tartar desert. How far will the Fed go? she go ?” asks Frédéric Rollin, investment strategy advisor at Pictet Asset Management, for whom “the financial health of private players, banks, industries, households seems solid and resistant to shocks. We are not in the 2002 situations – over-indebtedness of companies – or of 2008 – over-indebtedness of households. The urgency for the Fed remains the control of inflation which, it should be noted, remains dynamic.
In terms of statistics, the “Philly Fed” (Philadelphia Fed manufacturing index) plunged to -8.7, missing expectations, and weekly unemployment benefit claims amounted to 214,000 new units, still close to this the 200,000 mark, which rhymes with chronic tensions on the American job market.
At midday on the foreign exchange market, the Euro was trading against $0.9740 about.
KEY GRAPHIC ELEMENTS
We are resuming our bearish work on the Euro/Dollar currency pair, with an adequate 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. “Trend is your friend”, teaches us the precious stock market adage.
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 0.9746 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 345 pips and the risk of loss is 145 pips.
CHART IN DAILY DATA
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