EUR/USD: A barometer of risk appetite whose needle is frozen

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The Euro, one of the reference markers of risk appetite in the eyes of fund managers, is in a consolidation phase, like equity markets on both sides of the Atlantic. , while the signs of a marked economic slowdown in the United States are multiplying. The recent publications of ISM activity indicators, below 50 for industry, and in sharp surprise decline for services, are all tangible signs, which will be confirmed or invalidated by the creation of jobs in the sector. private, to be published tomorrow.

“There is therefore a marked slowdown in growth forecasts for the end of the quarter, which also corresponds to the triggering of the stress phase for the banks”, for Alexandre Baradez (IG France), who summarizes the situation in these terms: “Even if this environment will increasingly limit the aggressiveness of central banks (Fed and ECB should reach their terminal rate during this quarter, the Fed may even have already reached it), the economic slowdown could weigh for some time in the equity markets and maintain volatility, before the tone of the central banks really softens. To summarize: a phase of temporary friction on the markets, between degraded economic data and central banks which do not yet pivot due to persistently high levels of inflation.”

A phase of friction on the equity markets, which could have a correlated impact both on crude oil, whose recent progress following the decision of OPEC+ to limit its progress could be retraced, and on the currency pair Euro / Dollar, one of the main barometers of risk appetite in trading rooms.

In the immediate term, still in the highly watched US employment sector, weekly new listings are finally moving away from the 200,000 new units mark, at 218,000, causing relative relief ahead of the NFP report release (No Farm Payrolls) tomorrow.

At midday on the foreign exchange market, the Euro was trading against $1.0890 approximately.

KEY GRAPHIC ELEMENTS

Around a 50-day moving average (in orange), whose orientation becomes horizontal, the technical messages delivered are progressively dual, without one camp or the other uniting. Opinion is therefore neutral on the flagship currency pair pending a concordant array of clear graphical and technical clues.

MEDIUM TERM FORECAST

In view of the key graphic factors that we have mentioned, our opinion is neutral in the medium term on the Euro Dollar (EURUSD).

We will keep this neutral opinion as long as the Euro Dollar (EURUSD) parity prices are positioned between the support at 1.0875 USD and the resistance at 1.1045 USD.

CHART IN DAILY DATA