(News Bulletin 247) – Against a background of falling bond yields across the Atlantic, the Dollar began a sharp rebound against the Euro, after remarks deemed rather reassuring by the boss of the San Francisco branch of the Federal Reserve . Not enough to change the backdrop, the preferred work matrix, which remains a tight monetary turn scenario for the year 2022.
For its part, the single currency took advantage of encouraging statistical data this morning to give itself more air. The final Eurozone manufacturing PMI data (IHS Markit) for January came out at 58.7, almost on target.
Chris Williamson, Chief Economist at IHS Markit, shed the following light: “Eurozone manufacturers appear to be better able to weather the Omicron variant than previous waves of Covid-19, with the latest PMI data having reported the strongest growth in production and order books for four months in January.The horizon has also brightened for companies, as the slowdown in the increase in supplier delivery times has boosted the morale of manufacturers whose Optimism has thus recovered to its highest level since June.”
Williamson, however, warns of the potential consequences of escalating geopolitical tensions between Moscow and Kyiv, which together with “the energy price crisis and the risk of monetary policy tightening by global central banks have fueled headwinds blowing on the region’s growth prospects. Thus, despite the easing of tensions on global supply chains, the environment is likely to prove less favorable to demand in the coming months.”
Also published this morning, the unemployment rate in the Euro Zone continued to fall, now at 7.0% of the working population.
Still in terms of statistics, currency traders were able to take note on Monday of the preliminary data for the Euro Zone GDP, for the fourth quarter as a first estimate, at +0.3%, slightly below expectations on a quarterly basis. The rest of the week will be copious in this regard, with inflation figures in the Euro Zone on Wednesday and the ADP survey on American employment, the outcome of the Board of Governors of the ECB on Thursday and the federal monthly report on the American Jobs Friday.
To follow the American ISM manufacturing PMI at 4:00 p.m., as well as new job offers (JOLTS), still across the Atlantic at the same time.
At midday on the foreign exchange market, the Euro was trading against $1.1260 about.
KEY GRAPHIC ELEMENTS
The breakout of $1.1260 rhymed with a powerful increase in volatility. The spot is now visiting levels not seen since the end of May 2020. As seen in the preamble, the exercise now consists of assessing what the shape of the consolidation to come may be in order to optimize a new bearish entry point. We prefer to stay, during this wait, out of the spot.
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 1.1116 USD and the resistance at 1.1360 USD.
CHART IN DAILY DATA
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Source: Tradingsat
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