(News Bulletin 247) – Although the forces tended to balance out in the very short term, the pressure remained on the Euro, on the monetary, graphic, technical and psychological levels against a Dollar whose potential for remuneration has strongly increased. increased in recent days, with the change in tone of the Fed. Conversely, the ECB is not yet prepared to take a sharp monetary turn, so as not to risk breaking the growth dynamic at the worst time.
Ms. Largarde, questioned yesterday morning on France Inter, wanted to be reassuring, indicating once again that a change in monetary policy was not to be expected in the short term. “We consider that during the year 2022, [les prix] will stabilize and gradually decline over the course of the year,” she said, adding that this decline is expected to continue in 2023 and 2024.
However, and while faced with equally strong inflation on this side of the Atlantic, “the ECB should gradually adopt a less friendly attitude and bond rates are very likely to rise again”, for Frédéric Rollin, strategy adviser investment at Pictet AM, it is indeed the aggressiveness differential between the two major central banks that will drive the currency pair. And for now, hostilities are stronger on the Fed side.
In terms of statistics, there were no surprises to report on inflation in the Euro Zone yesterday: the final data for December for the consumer price index showed an annualized increase of 2.6% (excluding volatile elements). Across the Atlantic, weekly jobless claims for the week narrowly missed expectations, at 286,000 new units, while the Philly Fed (Philadelphia Fed manufacturing index) rose to 23.2 points beating target.
In the immediate future, traders will take note of the consumer confidence index in the Euro Zone at 4:00 p.m. (EuroStat).
At midday on the foreign exchange market, the Euro was trading against 1,1340$ about.
10-year Treasuries retreated slightly below 1.80.
KEY GRAPHIC ELEMENTS
We warned in our previous analyzes on the flagship currency pair against the “risk” of a false exit from above, an elongated wedge pattern. We are there, and the expression of this false exit abruptly brought the spot back against a 100-day moving average (in orange) with a sharp bearish bias. Traders will be able to gradually resume short positions on the EURUSD spot by taking advantage of a much better quality entry point.
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).
Our entry point is at 1.1334 USD. The price target of our bearish scenario is at 1.1001 USD. To preserve the capital invested, we advise you to position a protective stop at 1.1431 USD.
The expected return of this Forex strategy is 333 pips and the risk of loss is 97 pips.
CHART IN DAILY DATA
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Source: Tradingsat
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