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The Euro continued to trace a short diamond phase against the Dollar, which was precariously balanced, in a climate that was not conducive to a return of a strong appetite for risk on the market. The battery of American statistics, published yesterday, will have acted as a soothing balm on the financial community, before it realizes that it is only an additional argument for J Powell to reinforce the restrictive nature of its policy. monetary.
Yesterday’s consensus overruns on US statistics – the agenda was full of them! – have been spectacularly soared, in particular for the Richmond Fed’s manufacturing index, new home sales and durable goods orders. But it is above all the consumer confidence index (Conference Board), at 109.7, which gave balm to the heart of a financial community which does not see the end of the monetary restriction tunnel…
“Although the Expectations Index remained a hair below the threshold signaling a coming recession, a new measure found that far fewer consumers now expect a recession in the next 12 months compared to May.” , commented Dana Peterson, chief economist at CB.
The big money managers, in a symposium in the idyllic setting of Sintra, in Portugal, reaffirmed the need for a continuation of their firm monetary policy.
“These hawkish elements, likely to push up rates, were demolished by the publication of activity indicators for the month of June on both sides of the Atlantic. If, in the United States, the PMIs continue to slow down with good resilience in services, but they mark a clear slowdown in the euro zone. It is therefore a race against time between growth and inflation because if it takes too long to fall again, the inflation could jeopardize the “soft landing” scenario”, for Thomas Giudici, head of bond management at Auris Gestion.
On Tuesday, the President of the European Central Bank (ECB) confirmed that her institution still had rate hikes in sight. “It is unlikely that in the near future the central bank will be able to say with confidence that the peak in rates has been reached,” she said at the ECB’s annual forum in Sintra, in Portugal.
J. Powell and Ms. Lagarde will also speak today, in Sintra, during the ECB’s annual forum.
Currency traders are also already waiting for PCE (personal consumption expenditures) prices, the Fed’s favorite measure in its assessment of price dynamics. See you on Friday. By then Thursday, the latest GDP data will be released.
At midday on the foreign exchange market, the Euro was trading against $1.0930 approximately.
KEY GRAPHIC ELEMENTS
The 20-day moving average (in dark blue) has just cut downwards the trajectory of its 50-day counterpart (in orange): the bearish message emerges strengthened. Note the importance of the crossing angle of these trend curves. Next intermediate threshold identified: $1.0550, a breach of which would have consequences in terms of occasional downward acceleration.
The short position will be held with discipline as long as the 20-day moving average gravitates below its 50-day counterpart (in orange).
A bevel (wedge) concentrates the energy of the spot. It just made a foray above, with no formal sign of a bullish reversal. On the contrary, the spot retraced this incursion in a handful of hours. Hence a very unattractive weekly candle (S25). In diamonds, the balance is precarious.
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 1.0933 USD. The price target of our bearish scenario is at 1.0693 USD. To preserve the invested capital, we advise you to position a protective stop at 1.1013 USD.
The expected return of this Forex strategy is 240 pips and the risk of loss is 80 pips.
The News Bulletin 247 board
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