EUR/USD: Towards a chart rejection on the short moving average

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The Euro/Dollar, in a transitional phase this week after the greenback’s powerful fall last week against a backdrop of cooling price temperatures, is consolidating by playing the tightrope around 1.1200. An uncomfortable situation, which suggests a graphic rejection, for example on the short moving average, before resuming its ascent.

For the time being and in the absence of sharp statistical benchmarks in the Euro Zone this morning, the currency pair is holding up, with the support of the DAX and the CAC, themselves encouraged by the comments made earlier in the week by a member of the 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.

Yesterday, still on the statistical front, stakeholders did not have to deal with any major surprises with the publication of the final consumer price index data for the month of June, up 5.5% annualized in core data, i.e. stripped of food, energy, alcohol and tobacco. To follow at 2:30 p.m. across the Atlantic, new weekly unemployment benefit claims, as well as the Philadelphia Fed (Philly Fed) manufacturing index, expected to rise to -10.1 points.

At midday on the foreign exchange market, the Euro was trading against $1.1210 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. For the time being, the preferred option is that of a chart rejection on the 20-day moving average (in dark blue).

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 1.1194 USD. The price target of our bearish scenario is at 1.1028 USD. To preserve the capital invested, we advise you to position a protective stop at 1.1277 USD.

The expected return of this Forex strategy is 166 pips and the risk of loss is 83 pips.

CHART IN DAILY DATA