EUR/USD: A week punctuated by sharp appointments on US employment

(News Bulletin 247) – The forces remained momentarily balanced on the Euro/Dollar currency pair, after crossing remarkable moving averages. The Euro, the currency marker of risk on the financial markets, was resisting as the macroeconomic indicators of the main economic poles of the planet militated for a soft landing. The Dollar, for its part, remained on the lookout, with the approach of particularly important figures on American employment this week (JOLTS, ADP, weekly registrations for unemployment benefits, and NFP at the high point on Friday).

Numbers that, combined with recent PCE prices, could tip the scales towards an additional 25 or 50 basis points of Fed Funds for the next Fed Monetary Policy Committee. In the immediate future, its Boss, J Powell, begins its traditional half-yearly hearings before the Parliamentarians. The challenge is to rule out, definitively or not, the “nightmarish” hypothesis of a price/wage spiral.

Because the state of tensions on employment is not only strong, but chronic. “Jobs are plentiful in the United States, but applicants are rare,” coldly summarizes Christian Scherrmann, American economist at DWS, who observes that “there are almost twice as many job offers as job seekers. The last time this ratio was this high was in the midst of World War II, when the industry had to reorient itself radically towards the production of weapons and many young Americans were serving overseas. “

At midday on the foreign exchange market, the Euro was trading against $1.0680 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 1.0686 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 1.0851 USD.

The expected return of this Forex strategy is 447 pips and the risk of loss is 165 pips.

CHART IN DAILY DATA