(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.
On the eve of the next Fed meeting, the tensions of recent days on sovereign yields suggest that operators are counting on a sharper tightening than initially expected, with a possible first rate hike as early as March. Verdict at the end of the meeting on Wednesday. The press conference will be dissected there in its least inflections of elements of language.
For the time being, traders have just taken note of the manufacturing PMI in flash data for January in the Euro Zone, clearly above expectations, at 59.0, thanks to the support of the German component (60.5). For services, the score misses – but by very little – the target.
On the leading industrial power in the Euro Zone, Phil Smith, associate director at IHS Markit, sheds the following light: “the industry should experience a recovery in 2022 as supply bottlenecks are resolved, but seeing growth at this speed is already a welcome development. The drag on production due to supply chain issues appears to have eased further, although there is still plenty of room for improvement on this front.”
To be monitored on the macroeconomic side for the rest of the day, the manufacturing and services PMIs (Markit, flash data) at 3:45 p.m. The calendar will expand further tomorrow with in particular the IFO business climate index in Germany and the American consumer confidence index (Conference Board). Find here our macroeconomic calendar, an essential working tool for currency traders.
At midday on the foreign exchange market, the Euro was trading against 1,1320$ about.
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 1.1323 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 1.1411 USD.
The expected return of this Forex strategy is 322 pips and the risk of loss is 88 pips.
CHART IN DAILY DATA
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Source: Tradingsat
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