EUR/USD: Non Farm Payrolls and Aix Economic Meetings on the menu

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The foreign exchange market must deal with the concomitance of at best blurred signals, at worst worrying on the economic activity of the three main economic poles of the planet, and the prospect, for many more months, of a restrictive monetary policy of the part of the Fed and the ECB.

“In France and Germany, industrial production is certainly progressing slightly, but remains well below the pre-covid level, and has been moving sideways since January. The sector has recovered better from the pandemic in Italy and Spain, it “However, recorded a sharp, surprising drop in April. Despite the easing of energy prices, the energy-intensive branches of the EMU such as chemicals or metallurgy did not increase their production enormously this year”, note the economists from Swiss Life AM.

“The June PMI confirms the industrial depression in the eurozone with a further decline in production and orders and – a first since the pandemic – a decline in industrial employment.”

The services PMI in final data for June did not shine any brighter either.

Across the Atlantic, it was mainly data on consumer confidence that sounded the alarm.

On the persistence of a firm monetary policy, traders will have the opportunity to find out more this afternoon by following the question and answer session to which Christine Lagarde will lend herself during the Aix Economic Meetings. However, all eyes will be on the publication of the federal private employment report, whose persistent tensions could further support the content of the Fed Minutes, campaigning for a 25bp hike in Fed Funds at the end of the month.

See you at 2:30 p.m. for the publication of this NFP. The preview published yesterday by the firm ADP (Automatic Data Processing), although resulting from a different methodology, sounded like a thunderclap. The firm highlighted nearly 500,000 job creations in the private sector, exploding expectations… These persistent tensions on employment raise the specter of a price-wage loop, the fear of the Federal Reserve .

At midday on the foreign exchange market, the Euro was trading against around $1.0880.

KEY GRAPHIC ELEMENTS

The Euro/Dollar currency pair now sees its 20-day moving average (in dark blue) cut upwards against its 50-day counterpart (in orange), which requires us, according to the established trading plan, to cut our positions short, waiting for suitable signals. The form of congestion observed since June 16 lacks frankness, and remains poor in lessons.

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 maintain this neutral opinion as long as the Euro Dollar (EURUSD) parity prices are positioned between the support at 1.0784 USD and the resistance at 1.1000 USD.

CHART IN DAILY DATA