(News Bulletin 247) – The Euro showed a negative bias against the Dollar Thursday at midday, against a backdrop of contraction in risk appetite, as confirmations of inflation that is more durable and stronger than anticipated were displayed on the screens of the trading rooms. Latest publication to date, by EuroStat: inflation in the sense of the CPI, at +8.5% for the month of February at an annual rate, beyond expectations. In data corrected for volatile elements (core inflation), prices rose at an annual rate of 5.6%. Enough to put pressure on the European Central Bank (ECB) in its monetary management for the coming months.
On the Fed side, “given the resilience of the American economy and the strength of the job market, it is logical that inflation will take longer than expected to return to a satisfactory level”, for Emmanuel Auboyneau, Managing Partner AMPLEGEST. “The deceleration is still there and should continue until the end of the year, but the pace is likely to slow down. The Federal Reserve must above all monitor wages and employment because it wants to avoid the anchoring of a price-wage loop. He therefore still has work to do.” Operators will also have sharp benchmarks on March 8 and 10 with the ADP survey on employment and the federal report on private employment in February. To be continued tomorrow also, the weekly registrations for unemployment benefits.
At midday on the foreign exchange market, the Euro was trading against $1.0620 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 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 1.0624 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 1.0791 USD.
The expected return of this Forex strategy is 385 pips and the risk of loss is 167 pips.
The News Bulletin 247 board
CHART IN DAILY DATA
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