EUR/USD: Heavy atmosphere, slightly better however on the ZEW

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The Euro/Dollar currency pair validated its passage below its 50-day moving average, in a climate that was very unfavorable to risk appetite, in particular due to the economic situation in China. The latest statistical publications to date came to remind us of this last night, as did the comments from the Chinese National Bank. The latter took the markets by surprise by lowering its key rate, proof of the need for support for the economy.

Mr. Boy (IG France) notes: “In China, many statistics are expected this week, but investors will be especially attentive to the real estate development sector, with a further drop of more than 15% on Monday morning from Country Garden. industrial production, retail sales and the unemployment rate, published overnight from Monday to Tuesday all missed expectations significantly.

Markets are also facing a resurgence of geopolitical risk linked to the Ukrainian conflict. “Markets will be watching the situation in the Black Sea, after the control of a Ukrainian cargo ship by Russia on Sunday, which led to the latter firing, in order to force the ship to stop and put a little more pressure on this essential route for the transport of raw materials in the region”, commented M Boy.

However, the currency pair is resisting thanks to the highly anticipated ZEW index of confidence in the German economy, which came out up at -5.5, against a consensus at -12. Remember that the leading economy in the Euro Zone, which has technically entered into recession, is under the spotlight.

ZEW Chairman, Professor Achim Wambach, commenting on the survey results, commented: “The ZEW Economic Sentiment Indicator remains in negative territory, although it shows a slight improvement from the month Financial market experts thus anticipate a slight improvement in the economic situation by the end of the year.However, these increased expectations must be seen in the context of a significantly deteriorated assessment of the current economic situation in Germany It should be noted that respondents, on the whole, do not anticipate further interest rate hikes in the Eurozone and the United States, and that the economic outlook for the United States has seen an increase significant – these factors contribute to improving expectations for Germany”.

To follow on the agenda this afternoon retail sales and the manufacturing index Empire State at 2:30 p.m. We will insist on the lack of landmarks from Milan, closed for the Assumption holiday, and from Paris, open but deserted by a large fringe of investors.

At midday on the foreign exchange market, the Euro was trading against $1.0930 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