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If last week, the currency pair had exploded upwards in response to publications showing a marked slowdown in price dynamics across the Atlantic, this week is the scene of a very marked rebalancing, in the form of a consolidation. Movement that came to be fueled by one of the members, however renowned hawkish of the European Central Bank (ECB).
Klaas Knot, president of the Bank of the Netherlands and member of the ECB’s governing council, said on Tuesday that rate hikes after July were not “a certainty” but “at most a possibility”. These comments give investors hope that the ECB’s monetary tightening policy is coming to an end. What feed a little more the optimism of investors on the orientation of the monetary policy of the European institution.
On the macroeconomic side this Wednesday, to follow housing starts and building permits across the Atlantic at 2:30 p.m. Traders didn’t have to contend with any major surprises when the final consumer price index data for June was released, up 5.5% annualized in core data, i.e. i.e. stripped of food, energy, alcohol and tobacco.
Across the Atlantic yesterday, the statistics militated for a cooling of the economic machine. Retail sales came out well below expectations for the month of June (+0.2% against a target of +0.5%). Target completely missed also for the federal monthly report on industry (volume of production and rate of use of productive capacities).
At midday on the foreign exchange market, the Euro was trading against $1.1220 approximately.
KEY GRAPHIC ELEMENTS
The consolidation of the advance from July 7 to 13 is “too straight” to announce an immediate restart. The scenario of a continuation of this consolidation with alternating pendular movements is favoured.
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 1.1222 USD. The price target of our bearish scenario is at 1.1060 USD. To preserve the capital invested, we advise you to position a protective stop at 1.1301 USD.
The expected return of this Forex strategy is 162 pips and the risk of loss is 79 pips.
The News Bulletin 247 board
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