EUR/USD: A safeguard ready to yield

(News Bulletin 247) – The Euro continued its process of gradual weakening of $1.0645 / $1.0650 against the Dollar, in a context of warming yields on 10-year US sovereign bonds, the Treasuries 10 years, which were now flirting with 4% after a series of economic statistics showing a stronger than expected resilience of the American economy. The persistent pressures on employment, in particular, militated for the maintenance of a firm monetary policy on the part of the Federal Reserve (Fed).

Precisely, traders will be able to have, if necessary, indices this evening, with the publication, at 8:00 p.m. (Paris time), of the Minutes of the Fed. As a reminder, this is the report of the debates, chronologically (hence the name Minutes) of the last meeting of the Fed’s Monetary Policy Committee (FOMC). The opportunity to realize the content of the debates, the balance of power between hawkish (those who advocate an aggressive monetary policy), and dovish (conversely, those who want to pull less hard on the monetary cord).

Yesterday Tuesday, even as Wall Street started its week, due to a Monday holiday, PMI surveys (of purchasing managers) both exceeded analysts’ expectations for US data, and even exceeded the bar 50 points for services. This is enough to generate tension on risky asset classes, a family of which the Euro is a part.

Note that the IFO business climate index in Germany came out at 91.1, a very slight increase, perfectly on target (the consensus).

At midday on the foreign exchange market, the Euro was trading against $1.0645 approximately.

KEY GRAPHIC ELEMENTS

After gradually weakening from February 6 to 14, the 50-day moving average (in orange) ended up giving way. This underlying trend line is now under threat from its 20-day counterpart (in dark blue). The sell signal would then gain in intensity if necessary. The crossings of these two remarkable moving averages have been providing excellent positioning and tracking signals for many months. trade.

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 1.0643 USD. The price target of our bearish scenario is at 1.0239 USD. To preserve the invested capital, we advise you to position a protective stop at 1.0816 USD.

The expected return of this Forex strategy is 404 pips and the risk of loss is 173 pips.

CHART IN DAILY DATA