(News Bulletin 247) – The Euro consolidated, against the Dollar, its significant advance of last week, an advance fueled by an appetite for risk temporarily regained with the easing of health restrictions in China. In addition, inflation figures across the Atlantic caused a spectacular decline in sovereign bond yields.
Beijing announced several measures in a note posted Friday on the internet by state broadcaster CCTV, AFP reported. Chinese and foreigners arriving in China will now undergo a quarantine of only eight days, against ten previously, the agency said. In addition, Beijing has put an end to a “circuit breaker” mechanism which canceled international flights for one to two weeks to China in the event of the discovery, on the arrival of previous flights, of a number deemed too high. infected passengers on board.
As a reminder, on Thursday, operators were pleasantly surprised to see US inflation slow down quite significantly. The various consumer price indices in the United States were THE statistical highlight of the week. In detail, prices, in their broadest sense, including energy and food, rose 7.7% at an annualized rate, against 8.2% last month, and 7.9% expected, according to the latest figures from the Census Bureau. , in seasonally adjusted data. Excluding volatile elements (food and energy), prices rose by 6.3%.
But “the decline in inflation is mainly linked to the health sector, the tightening of monetary policy continues, and even if the pace of rate increases should slow down (which has been expected since this summer and is not nothing new information), there is absolutely no question of taking a break now, according to the members of the Fed”, warns Vincent BOY (IG France). Indeed, the reading of these figures must be done in the light of the change in methodology in the calculation of health costs.
In the immediate term, and at the dawn of a week full of statistical events, currency traders have just learned of a 0.9% increase in industrial production in the Euro Zone for the month of September, in annualized rate, significantly above expectations.
At midday on the foreign exchange market, the Euro was trading against $1.0290 about.
KEY GRAPHIC ELEMENTS
The single currency returned to levels not seen since August, and for the first time since September 21, and managed to amplify its excursion beyond the level of perfect parity. The crossing of two remarkable moving averages (20 days out of 50 days) is validated. The next test is a resistance level around $1.0350. Beyond that, a broader revival of the Euro could be envisaged.
MEDIUM TERM FORECAST
In view of the key graphic factors that we have mentioned, our opinion is positive in the medium term on the Euro Dollar (EURUSD) parity.
Our entry point is at 1.0309 USD. The price target of our bullish scenario is at 1.0584 USD. To preserve the capital invested, we advise you to position a protective stop at 1.0191 USD.
The expected return of this Forex strategy is 275 pips and the risk of loss is 118 pips.
CHART IN DAILY DATA
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