EUR/USD: Powerful technical barriers

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(News Bulletin 247) – The Euro remained penalized against the safe haven Dollar on the foreign exchange market, in a cool atmosphere 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, core inflation data in the Euro Zone yesterday came out in line with expectations, with no deviation from initial estimates, at +4.8% year-on-year for the month of September. Japanese bank Nomura expects for the October Governing Council “the ECB will raise all three policy rates by 75 basis points, bringing the deposit rate to 1.50%. We continue to expect this to happen. will be followed by a 75 basis point hike in December. [Nomura] now forecasts a 50 basis point hike in February 2023 (vs. 25 basis points previously).”

To follow as a priority on the statistical agenda this Thursday, the manufacturing index Philly Fed and weekly registrations for unemployment benefits at 2:30 p.m.

At midday on the foreign exchange market, the Euro was trading against $0.9815 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.

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 0.9814 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 413 pips and the risk of loss is 77 pips.

CHART IN DAILY DATA

©2022 News Bulletin 247

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