(News Bulletin 247) – The Euro Dollar remained at the top of consolidation, against a background of risk appetite, with the hope of a “transformation of the test” this afternoon, with the much awaited publication of prices for consumption for the month of December. While this indicator is not the Fed’s preferred measure of inflation – it prefers PCE prices – there is a clear opportunity to see if the peak in inflation across the Atlantic has indeed been crossed. Meet at 2:30 p.m. (Paris time).
The CPI (consumer price index, or CPI for English speakers) is expected, for the widest product base and at an annual rate, up 6.5% in December, against +7.1% . The confirmation or not of the beginning of a rapid descent, and therefore of an end to an inflationary “peak”, would give credit to a little “flexibility” in the monetary policy of the Federal Reserve, whose members more hawks want to remain particularly vigilant, however.
These prices will be analyzed within an equation which includes, among other elements, tensions on the employment front, PMI-type activity barometer indicators, measures to reopen major Chinese urban centres.
“If we combine the ISM and PMI leading indicators, the inflation figures or the sharp slowdown in the real estate sector and the credit market, it is quite possible that the Fed no longer has much room for maneuver. for future rate hikes”, advances Alexandre Baradez (IG France). “Its aggressiveness in place since 2022 will likely struggle to get past the first quarter milestone, especially knowing that the rate hikes already on board will continue to produce headwinds for the economy with delayed effect.”
We will also follow, at 2:30 p.m., the level of weekly registrations for unemployment benefits across the Atlantic.
At midday on the foreign exchange market, the Euro was trading against $1.0770 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. This crossing is effective in value, but without volatility. Moreover, the RSI/price divergence is a concern 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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