EUR/USD: A deceleration in consumer prices across the Atlantic is expected

(News Bulletin 247) – The Euro continued, against the Dollar, the construction of a consolidation phase in tidied upnear $1.0750, in a forex market that tries to piece together the puzzle of the shape of the curve of Fed Fundswith the following exhibits: a confusing federal jobs report, with double lessons, firm and decisive interventions from Fed executives, and a speech, without relief, all in dodging, from the boss of the Fed yesterday at a colloquium organized by the Bank of Sweden…

On American employment, “investors have […] chosen to see the glass half full on employment figures. If the job market remains as solid as ever with sustained creations and even a drop in the unemployment rate, the market has preferred to focus on lower wage pressures”, analyzes M Giudici, head of bond management at Auris Gestion .

The unemployment rate, expected to be stable at 3.7% of the active population, fell sharply to 3.5%, which must have made the hawks of the “Federal Reserve” wink. 223,000 jobs were created in the last month of 2022, in the private sector (excluding agriculture), a figure higher than expected.

Regarding recent restrictive remarks by Fed officials, Mary Daly, the president of the San Francisco Fed, said she expected the US central bank to push rates above 5% before pausing. Atlanta Fed President Raphael Bostic made similar comments, seeing the Fed come in at a terminal rate between 5% and 5.25%, down from a current range of 4.25% to 4.50%.

It is in this context that traders will approach tomorrow the long-awaited publication of consumer price figures in the United States for the month of December. On the widest product base, prices are expected to decelerate to +6.5% on an annual basis.

At midday on the foreign exchange market, the Euro was trading against $1.0750 around.

KEY GRAPHIC ELEMENTS

The break of the 20-day moving average (in dark blue), which has served us up to now as a perfectly materialized trailing stop, requires cutting long positions, pending a relevant entry point. . However, no pronounced bearish reversal pattern has been identified. Conversely, only a crossing into a volatility high of $1.0750 would validate a bullish extension at this stage.

MEDIUM TERM FORECAST

In view of the key graphic factors that we have mentioned, our opinion is neutral in the medium term on the Euro Dollar (EURUSD).

We will maintain this neutral opinion as long as the Euro Dollar (EURUSD) parity prices are positioned between the support at 1.0435 USD and the resistance at 1.0855 USD.

CHART IN DAILY DATA

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