EUR/USD: Current technical event

(News Bulletin 247) – Interesting technical fact at the heart of the week: the Euro against the Dollar is testing its 20-day moving average (in dark blue), at this stage without success, after the latter broke its counterpart at 50 days (in orange), February 24. A confirmation of this failure could bring a clear bearish message for the days to come. For the time being, the market psychology remains the same, namely that of a fear of firm inflation for many more months on the other side of the Atlantic – PCE prices have had their effect in the trading rooms -, and by consequently, the anticipation of a still significant remuneration gap between the greenback and the single currency throughout the current year.

The publication of a manufacturing ISM on Wednesday almost in line with expectations allows risk appetite not to tip further into the red, despite the hawkish messages from Fed executives. 25 or 50 additional basis points for the Fed Funds at the end of the next FOMC: this will at least initially be the binary scenario for working the currency pair. It should be noted that the yields on 10-year US Treasury bonds are once again approaching the symbolic threshold of 4%.

On the European statistical side, no significant deviation from the consensus for the German industrial PMI in final data for January.

At midday on the foreign exchange market, the Euro was trading against $1.0650 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 in fact been providing excellent positioning and tracking signals for many months. trade. This crossing is carried out, validated and 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 1.0674 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 1.0801 USD.

The expected return of this Forex strategy is 435 pips and the risk of loss is 127 pips.

CHART IN DAILY DATA