(News Bulletin 247) – This article, in free access, is produced by the stock market analysis and strategy research team of News Bulletin 247. To not miss any opportunity, consult all the analyzes and discover our portfolios by accessing our Privileges area.
With NVidia’s buoyant quarterly copy, risk appetite was making a tentative comeback in financial markets on both sides of the Atlantic, allowing the flagship currency pair to find resistance on Thursday. . The short-term trend remains bearish, however, since the July 18 doji star candle of indecision, against a backdrop of tension over the economic health of the world’s main economic poles, in particular Germany, which has technically entered recession.
A weakness that did not contradict the activity indicators published yesterday. The very first PMI estimates for the current month were particularly disappointing for services in the Euro Zone as a whole, at 48.7, while the market consensus suggested a less significant drop, above in all cases of 50 points which, as a reminder, separates a contraction from an expansion of the sector considered. This is a 30 month low. The disappointment is also severe in the German industrial sector alone, a driving force for the old continent, at 39.1, very close to the target, however.
“Taking PMI data into account flash of August in our GDP nowcasts leads us to anticipate a contraction in the eurozone of 0.2% in the third quarter”, commented Dr. Cyrus de la Rubia, Chief Economist at Hamburg Commercial Bank. “The president of the European Central Bank, Christine Lagarde, had warned of the inflationary risk associated with wage increases and declines in productivity. These concerns appear to be on the verge of materialization, at least for the vast services sector in which the rise in prices paid, and in particular labor costs, accelerated during the month. At the same time, the stagnation of employment, combined with the decline in production, translates into a decline in labor productivity. The ECB should therefore be reluctant to forego further interest rate hikes in September.”
Currency traders will gradually turn to the high mass of the world’s main moneymakers, the Jackson Hole symposium opening its doors this Thursday, in the idyllic setting of the eponymous valley of Wyoming. This year, the symposium will take place in a context of inflation on the way to being brought under control for the main economic poles of the planet, but without reaching the target rates… Moreover, “the July minutes of the FOMC (Federal Open Market Committee) perhaps best sums up the mood of Western central bankers, indicating that most participants continue to worry about “significant upside risks to inflation”, Muzinich strategists argue. & Co.
On the agenda this Thursday, to follow as a priority, across the Atlantic, orders for durable goods and weekly registrations for unemployment benefits.
At midday on the foreign exchange market, the Euro was trading against $1.0860 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. The bearish message takes shape with the break – now validated – of the 50-day moving average by its 20-day counterpart (in dark blue), at a significant angle. The short position will be kept as long as the last one gravitates below the first one.
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 1.0853 USD. The price target of our bearish scenario is at 1.0551 USD. To preserve the invested capital, we advise you to position a protective stop at 1.0951 USD.
The expected return of this Forex strategy is 302 pips and the risk of loss is 98 pips.
The News Bulletin 247 board
CHART IN DAILY DATA
I have over 8 years of experience working in the news industry. I have worked as a reporter, editor, and now managing editor at 247 News Agency. I am responsible for the day-to-day operations of the news website and overseeing all of the content that is published. I also write a column for the website, covering mostly market news.
