(News Bulletin 247) – Risk appetite, fueled by confirmation yesterday of the slowdown in price increases across the Atlantic, and this Friday in France, allowed the single currency to show resistance near $1.0830 , to new highs since last April.
Statistical high point yesterday, the consumer price index in the United States, for the widest product base, came out perfectly on target, at +6.5% on an annual basis. What bring a certain relief without blowing the cork of the bottle of champagne.
The confirmation is that of a marked slowdown in the rise in prices on the other side of the Atlantic, even if the road to a landing in inflation will still be long. The fight, through a firm monetary policy, will clearly have to continue.
“The market remains confident that the Fed will not raise rates as much as it indicated in the December projections. Fewer rate hikes create favorable market dynamics for risk (equities, credit and duration included) against a drop in the dollar”, says Axel Botte, International Strategist at OSTRUM AM. “However, it cannot be ruled out that the reopening of China will induce an early rebound in oil prices. The improvement in the outlook is already visible in industrial metal prices. In this case, market expectations would reconverge towards the levels indicated by the FOMC…”, warns the strategist.
In this context, the inflation forecasts (University of Michigan), preliminary data, will be interesting to analyze this afternoon. At the same time, the publication of the consumer confidence index (U-Mich, preliminary data), which traditionally has a strong impact in the event of a deviation from the consensus, should be on the agendas of forex traders.
At midday on the foreign exchange market, the Euro was trading against $1.0820 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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