(News Bulletin 247) – The Euro/Dollar currency pair was in the process of breaking out of its 50-day moving average (in orange), a major dynamic benchmark, as the tensions on the rates came to light again, against a backdrop of acceptance by the market of the continuation of a firm and offensive monetary policy on both sides of the Atlantic.
Central bankers overwhelmingly reaffirm that Fed and ECB monetary tightening is not over. last week, when Lagarde and Powell had seemed less harsh”, underlines Xavier Chapard of La Banque Postale Asset Management.
The Japanese bank Nomura focuses, in a market note published on Monday, on the potential impact of the latest German inflation figures (CPI at 9.2% year-on-year, above the initial estimate of DeStatis, at 8.6% in very early estimates for January). “Could German inflation annoy the ECB?” asks the Nomura strategists. “That might not worry the ECB any more than it already does. The ECB has been clear that underlying inflation remains too high and that there are near-term upside risks. The language since the last Board of Governors has underscored this, and indeed it is a key reason for another likely 50 basis point rate hike at the March meeting.”
In terms of statistics, the preliminary data for the U-Mich consumer confidence index beat expectations by rising to 66.4 points.
THE Treasuries 10-year remained firm above 3.70%
At midday on the foreign exchange market, the Euro was trading against $1.0685 approximately.
KEY GRAPHIC ELEMENTS
The 50-day moving average (in orange), dynamic support that we have used a lot in recent months in our work on the currency pair, is in a breaking phase. All that is missing is an acceleration in volatility to fully validate this break, which occurs following a gradual weakening from February 6 to 9.
MEDIUM TERM FORECAST
In view of the key graphic factors that we have mentioned, our opinion is negative in the medium term on the Euro Dollar (EURUSD) parity.
Our entry point is at 1.0694 USD. The price target of our bearish scenario is at 1.0436 USD. To preserve the capital invested, we advise you to position a protective stop at 1.0805 USD.
The expected return of this Forex strategy is 258 pips and the risk of loss is 111 pips.
The News Bulletin 247 board
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