(News Bulletin 247) – The crossing of moving averages envisaged is effective on the Euro / Dollar currency pair, which accelerated its decline after the publication of a price index across the Atlantic, which militates for a continuation of a firm monetary policy, to fight against inflation, in the context of strong tensions, moreover, on the employment front.

PCEs (personal consumption expenditures), the Fed’s favorite measure in its inflation assessment, increased monthly by 0.6% for the month of January, against a target of +0.4% and a month of December at + 0.4%. What mechanically put pressure on the Fed to maintain a firm monetary policy. Just like the weekly registrations for unemployment benefits published yesterday, once again below the symbolic bar of 200,000 new units.

Moreover, the geopolitical situation reminds investors of risky assets on the occasion of the first anniversary of the Russian military aggression in Ukrainian territory. If “the problem of a possible collapse in the supply of raw materials in Europe has been largely resolved, […] a Russian offensive in the spring could quickly create a new situation,” said Marcus Poppe, co-head of European equities at DWS.

At midday on the foreign exchange market, the Euro was trading against $1.0550 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 indeed provided excellent positioning and trade monitoring signals for many months. This crossing is in progress, moreover in a relatively important angle.

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 1.0544 USD. The price target of our bearish scenario is at 1.0239 USD. To preserve the capital invested, we advise you to position a protective stop at 1.0721 USD.

The expected return of this Forex strategy is 305 pips and the risk of loss is 177 pips.

The News Bulletin 247 board

EUR/USD
Negative to 1.0544 €
Objective :
1.0239 (305 pips)
Stop:
1.0721 (177 pips)
Resistance(s):
1.0645 / 1.1045
Medium(s):
1.0435 / 1.0238 / 1.0100

CHART IN DAILY DATA