EUR/USD: The Dollar grows, but risk appetite supports the Euro

(News Bulletin 247) – The forces continued to balance out on the Euro/Dollar currency pair, at $1.07 for around one euro. Two antagonistic forces opposed each other by definition: on the one hand, the Euro, one of the reference markers of risk appetite, was in good shape in the wake of the share and equity markets. across the Atlantic. On the other hand, the Dollar remained supported by the prospect of maintaining a firm monetary policy for the whole of 2023, after recent statistical publications on employment, consumption and inflation, three component of the same inflationary equation.

Yesterday, in terms of statistics, the dynamics of retail sales (+3.0% monthly) and the manufacturing index of the New York Fed (Empire State Index), up very sharply although still in negative territory (-5.8), clearly exceeded expectations across the Atlantic. The Federal Reserve’s New York branch detailed: “New orders fell slightly, while shipments were flat. Delivery times shortened and inventories rose slightly. Employment levels fell for the first time since the start of the pandemic, and the average work week has shortened for a third consecutive month Rises in input prices and selling prices have accelerated Looking ahead, companies expect expect trading conditions to improve somewhat over the next six months.”

The market, without unduly ebbing its optimism, remains present on so-called risky assets, fully integrating the fact that a ebb in inflation is not imminent. Its “control” through an appropriate monetary policy is more important. Sébastien Grasset, Director of Asset Management at Auris Gestion, noted at the beginning of the week, in a weekly note, that “the President of the Fed recalled that the fight against inflation “will take a lot of time” and that the The road would be “long, even bumpy” to return to the 2% inflation target. Further rate hikes could therefore prove necessary if the American economy were not to slow down enough, the main point of attention. remaining inflation in services and tensions in the labor market.”

To be followed as a priority on the macroeconomic agenda this Thursday, a dense program at 2:30 p.m. (Paris time), with the following American figures: the producer price index, the Philly Fed manufacturing index, weekly allowance registrations unemployment, and housing starts and building permits.

At m-day on the foreign exchange market, the Euro was trading against $1.0700 approximately.

KEY GRAPHIC ELEMENTS

The EURUSD spot is rolling around its 50-day moving average (in orange), without any sharp technical signal emerging. It should be noted that an acceleration in downward volatility would fully validate a break, which would occur 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 neutral in the medium term on the Euro Dollar (EURUSD).

We will keep 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 1.1045 USD.

CHART IN DAILY DATA