EUR/USD: Solid PMI in 1st estimates for January

(News Bulletin 247) – The Euro continued to resist against the Dollar at the top of the consolidation, around $1.0870, after comments deemed offensive by a member of the ECB.

Klaas Knot, governor of the Bank of the Netherlands and therefore de facto member of the ECB’s governing council, told the Batavian press on Saturday that increases of 50 basis points (0.50 percentage points ) in the key rates of the euro zone central bank at its next two meetings, in February and March. Then “expect that we will not be finished by then and that other measures will follow in May and June”, he added according to comments relayed by the Reuters agency.

“Communications from the ECB have sown confusion in financial markets over the magnitude of March’s rate hike. Looking further ahead, we expect growth prospects to improve, in line with recent surveys, who continue to cement the idea that maximum pessimism is in the rearview mirror,” reads a note from Nomura this morning.

Among the “surveys” in question, those of the PMI activity indices (surveys of purchasing managers) are well received this morning, as regards the very first estimates for the current month. The German industrial component, which traditionally has a strong impact, even rose above the 50-point mark, which separates, as a reminder, a contraction from an expansion in the sector in question. Passage above 50 also to report for the services component of the whole of the Euro Zone.

Chris Williamson, Chief Business Economist at S&P Global Market Intelligence, shed the following light on the survey’s raw data: a stabilization of the region’s economy in January.The contraction may indeed have peaked in October, when fears of an energy crisis began to fade, thanks in particular to the fall in prices, itself favored by particularly mild temperatures and generous government aid.”

To be followed by equivalent figures in the United States at 3:45 p.m. and the Richmond Fed index at 4:00 p.m.

At midday on the foreign exchange market, the Euro was trading against $1.0870 around.

KEY GRAPHIC ELEMENTS

In the absence of validation of a configuration in ascending method, a continuation of neutral oscillations, in thin range near the moving average to 20 days (in dark blue) is expected. The very structure of the ongoing consolidation nevertheless testifies to the advantage taken by the Euro at the start of 2023.

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 1.0645 USD and the resistance at 1.1190 USD.

CHART IN DAILY DATA

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