(News Bulletin 247) – The Euro continued its flat consolidation against the Dollar, the spot being subject to headwinds after statistical indicators capable of both fueling risk appetite, and therefore the single currency (Conference Board of consumer confidence, final US Q3 GDP), and capable of reinforcing the tightening of the Fed’s tone, and therefore of supporting the greenback, by the mechanics of the “remuneration” differential between the currencies…
These are all signs of the resilience of the American economy which will comfort the Fed in pursuing its strict rate policy. The yield on the 10-year government bond (Treasuries 10 yrs) warmed up again to flirt with 3.70%, as the publication of the PCE index looms on Friday, the Fed’s favorite measure in its “appreciation” of inflation.
Excluding food and energy, data core, these prices are expected to rise monthly by 0.2%. Any significant deviation from the consensus will have a strong impact on the volatility of the spot.
To follow as a priority on the macroeconomic agenda this Friday, at 2:30 p.m., the PCE consumer price index (Personal consumption expenditures price index), a measure favored by the Fed in its assessment of inflation. Also to be monitored, still across the Atlantic, are orders for durable goods, household income and expenditure, sales of new homes, as well as revised data from the consumer confidence index (U-Mich). As a reminder, earlier in the week, the US consumer confidence index, as defined by the Conference Board, was a very pleasant surprise.
At midday on the foreign exchange market, the Euro was trading against $1.0615 around.
KEY GRAPHIC ELEMENTS
The 20-day moving average (in dark blue) continues to play its role of chart support. Positive opinion kept above this trendline whose orientation is straight. We will monitor the attitude of prices when making contact, if necessary, with this trendline.
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 1.0617 USD. The price target of our bullish scenario is at 1.1189 USD. To preserve the capital invested, we advise you to position a protective stop at 1.0434 USD.
The expected return of this Forex strategy is 572 pips and the risk of loss is 183 pips.
CHART IN DAILY DATA
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