(News Bulletin 247) – The Euro / Dollar was capping at the top of the flag, as crucial monetary deadlines approached next week. The ECB ends its next Board of Governors on 15/12. The Fed for its part completes its next Monetary Policy Committee (FOMC) on 14 December. The two dates are to be marked in red on the calendars of forex traders, as the signs on the respective trajectories of the key rates are awaited.
“The Last Rise [des Fed Funds] of the year could slow to 50 bps, after four consecutive increases of 75 bps”, for the strategists of IVO Partners. “Despite this, economic indicators in the United States, such as the PMI indices or the unemployment claims, bear witness to a cyclical slowdown and confirm investors’ expectations of a recession in 2023. Uncertainty still hangs over the extent and duration of this recession, although the consensus seems to be tending towards a “moderate” recession.
It is in this context that forex traders will take note this Friday of the producer price indices in the United States, as well as preliminary data from the consumer confidence index (U-Mich).
Yesterday in terms of statistics, weekly registrations for unemployment benefits, for week 48, amounted to 230,000, in line with expectations, confirming a significant degree of tension on the job market. As a reminder last Friday, the publication of the NFP corroborated these tensions: if the unemployment rate stood at a stable level, at 3.7% of the active population, the number of job creations in the private sector (excluding agriculture) remained high, at 263,000 new units, well above target; and above all, the dynamics of wages (+0.6% on a monthly basis) showed no signs of easing.
At midday on the foreign exchange market, the Euro was trading against $1.0560 about.
KEY GRAPHIC ELEMENTS
Volatility remains high on the spot which traces a broad consolidation, whose structure remains to be defined, around $1.0300. A continuation of these nervous oscillations is the preferred option, an unattractive graphic scenario for taking positions. We would prefer to stay out of the spot for the time being. The flag terminals are clearly marked, between 1.0240 and $1.05. The eventual formation of a diamond figure is not excluded.
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 1.0560 USD. The price target of our bearish scenario is at 1.0101 USD. To preserve the invested capital, we advise you to position a protective stop at 1.0631 USD.
The expected return of this Forex strategy is 459 pips and the risk of loss is 71 pips.
CHART IN DAILY DATA
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