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The bearish bias was confirmed in the short term on the Euro / Dollar, a movement initiated after the doji candle of July 18, against a backdrop of resurgence of concerns about Chinese economic activity, and more recently of a new bout of fever federal bond yields.
Ten-year US Treasury bonds (10-year Treasuries) hit their highest point since 2007, at 4.329%, even as concerns about the health of banks increase, and that real estate raises serious fears , particularly in certain regions where speculation has hitherto supported prices.
A movement which has accelerated since the publication this week of the Minutes, a traditional chronological account of the content of the debates at the last Monetary Policy Committee. The document shows, between the lines, that some Fed executives did not formally rule out an even bigger Fed Funds hike in July. For the month of September, a status quo on rates is the scenario that holds the rope, with a probability of 90.50% within the meaning of the CME’s FedWatch tool.
Although the CPIs have shown very encouraging signs with their recent momentum, the chronic strength of the job market suggests a long period of high prices. Christian Scherrmann, US DWS Economist, notes that going forward, “a slowdown in hiring is likely to be welcomed by central bankers, but for now, stubbornness in aggregate wage growth may be more important. .”
“While demand remains strong in sectors such as leisure, hospitality and healthcare, wages in these sectors have actually increased somewhat less than before. a heterogeneous set that supports both a soft landing scenario and a possible mild recession at some point.For the Fed, however, [le dernier rapport NFP] seems to support his orientation hawkishbut does not necessarily imply a further rise in September.
It was a question of employment just yesterday on the statistics side: new weekly jobless claims in the United States stood at 239,000, close to the expected figure (240,000) while the index of manufacturing activity in the Philadelphia region went back into the green in August, at 12 against -10 expected and -13.5 the previous month.
To follow the final inflation data in the Euro Zone for July, within the meaning of the CPI, at 11:00 am.
At midday on the foreign exchange market, the Euro was trading against $1.0870 approximately. A resistance to be put in relation with the European statistical figures published on Wednesday, and the balance of the trade balance for June, published on Thursday. EuroStat announces that the euro area recorded a surplus of 23 billion euros in its trade in goods with the rest of the world in June 2023, compared to a deficit of 27.1 billion euros in June 2022.
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.
The bearish message takes shape with the break – in progress – of the 50-day moving average by its 20-day counterpart (in dark blue), at a significant angle.
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 1.0865 USD. The price target of our bearish scenario is at 1.0693 USD. To preserve the capital invested, we advise you to position a protective stop at 1.0971 USD.
The expected return of this Forex strategy is 172 pips and the risk of loss is 106 pips.
The News Bulletin 247 board
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