EUR/USD: Dull, like risk appetite

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Against a background of contraction in risk appetite, the Euro remained feverish against the Dollar, failing to gain support on its 50-day moving average. Remember that the spot made a “false start” on Thursday, quickly changing its mind after a short moment of euphoria. Statistical high point on Thursday, and more generally last week, consumer prices nibbling 0.2% in July, in line with expectations, whether for the widest product base or the corrected data volatile elements. Over one year, prices increased by 3.2%.

A feeling of caution which will have been reinforced at the end of last week by the producer price indices for the month of July, which at +0.3% whatever the base of products used, exceeded the consensus in terms of monthly. Moreover, the consumer confidence index (preliminary data, U-Mich) contracted to 71.2, below the target without however moving significantly away from it.

On this side of the Atlantic, eyes remain nervously riveted on Germany, which is beginning to concentrate a certain number of concerns. The leading economy in the Euro Zone, although of course still very powerful, shows tangible signs of greater fragility than for France. The economic colossus of the Euro Zone, which entered recession, weakened by the fall in domestic consumption, is therefore weakened. We will carefully follow the next statistical publications on our powerful neighbor: ZEW, inflation, CPI, growth data, industrial reports, will be scrutinized even more than usual.

The Euro, a barometer of risk appetite in the financial markets, is suffering from growing concerns about the Chinese economy. “In China, many statistics are expected this week, but investors will be especially attentive to the property development sector, with a further drop of more than 15% this morning from Country Garden. Attention will also be drawn to the conference of the PBOC National Bureau of Statistics and Rate, although it is not expected to move. Attention will also be on comments from China’s central bank.” supports Vincent Boy, analyst IG France.

Tomorrow, traders will be able to follow a press conference by the National Bank of China.

No significant statistical figure is on the agenda this Monday. To follow tomorrow retail sales in the United States as well as the manufacturing index of the New York Fed (Empire State index).

At midday on the foreign exchange market, the Euro was trading against $1.0950 approximately.

KEY GRAPHIC ELEMENTS

The near total retracement of July’s gains does not militate at this stage for a continuation of the advance of the currency pair, without formally ruling it out. This retracement, by its magnitude, weakens the bullish message then delivered over a good part of July. The outcome of the ongoing test of the 50-day moving average (in orange) will be decisive. Immediate neutral opinion. Forex traders will therefore avoid taking a position in the next few hours on the currency pair, waiting for a directional entry.

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 keep this neutral opinion as long as the Euro Dollar (EURUSD) parity prices are positioned between the support at 1.0854 USD and the resistance at 1.1100 USD.

CHART IN DAILY DATA