(News Bulletin 247) – This article, in free access, is produced by the stock market analysis and strategy research team of News Bulletin 247. To not miss any opportunity, consult all the analyzes and discover our portfolios by accessing our Privileges area.
While the United States is heading at high speed against the wall of debt, at the risk, formally, of a payment default on June 1, the Dollar lost a few pips against the Euro, in a market which is showing signs of nervousness on all risky asset classes.
This Tuesday, “President Joe Biden is expected to receive members of Congress to discuss the US debt ceiling, following the postponement of the meeting, which should be held at the end of last week. Janet Yellen still sees June 1 as the date on which the United States will no longer be able to finance the functioning of the State, if the debt ceiling is not raised”, notes Vincent Boy, market analyst IG France.
“The negotiations concerning the American debt ceiling suggest the disappearance of a source of uncertainty for the markets, but caution is called for given the divisions between the White House and the Republicans”, for César Perez Ruiz, Head of Investments and CIO at Pictet Wealth Management, who argues: “This is an urgent matter: the US Treasury Department said on Friday it had just $88 billion to pay government bills as of May 10 – a figure to be compared with the 110 billion available a week earlier.”
The Dollar suffered yesterday from the collapse of the Empire State index for May, which measures the activity of the manufacturing sector in the New York area, (-31.8) against an indicator expected at -5 by the economists surveyed. speak Wall Street Journal. Strong disappointment to report on the German ZEW, a barometer of investor sentiment which plunged from 4.1 to -10.7.
“Financial market experts anticipate a worsening of the already unfavorable economic situation over the next six months. As a result, the German economy could slide into a recession, albeit to a limited extent. The drop in the sentiment indicator is partly due to expectations of further interest rate hikes by the ECB. In addition, the potential default of the United States in the coming weeks adds uncertainty to the global economic outlook”, comments the ZEW Chairman, the Professor Achim Wambach, on the results of the survey.
The dynamics of retail sales in the United States will be scrutinized on Tuesday (2:30 p.m.), especially since on Friday operators had to digest the very disappointing preliminary data from the consumer confidence index, within the meaning of the University of Michigan (U-Mich index).
At midday on the foreign exchange market, the Euro was trading against $1.0890 approximately.
KEY GRAPHIC ELEMENTS
The identified and fully validated ascending channel exit is accompanied by a triple top structure (04/14, 04/26, 05/04)*, which supports our bearish scenario on the flagship currency pair. We are now monitoring the relative momentum of the moving averages, keeping in mind that the price/RSI divergence has already sent a pessimistic message.
* We will appreciate on each of these dates the high shadows of the corresponding candles.
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 1.0891 USD. The price target of our bearish scenario is at 1.0551 USD. To preserve the invested capital, we advise you to position a protective stop at 1.0991 USD.
The expected return of this Forex strategy is 340 pips and the risk of loss is 100 pips.
The News Bulletin 247 board
CHART IN DAILY DATA
I have over 8 years of experience working in the news industry. I have worked as a reporter, editor, and now managing editor at 247 News Agency. I am responsible for the day-to-day operations of the news website and overseeing all of the content that is published. I also write a column for the website, covering mostly market news.
