EUR/USD: American inflation as justice of the peace

KEY GRAPHIC ELEMENTS

After data on producer prices which still show tension in supply chains with figures published yesterday above expectations, currency traders are awaiting today the publication of consumer prices, also called CPI. If the data were to come out higher than expected, the dollar would continue its upward trend and American long-term rates would start to rise again, penalizing risky assets but also the European currency. We will therefore monitor the publication of these figures at the beginning of the afternoon. Before the publication of these figures, the ECB minutes will be published. Yesterday’s release of Fed minutes showed that members are likely to pause the monetary tightening cycle that began in March 2022. However, a majority of 12 to 7 officials indicated in new forecasts that a Further rate hikes may be needed by the end of the year to bring inflation closer to the 2% target. Central banks are now navigating in the fog and adjusting rate levels 25 basis points by 25 basis points. Recent geopolitical developments complicate this reading while the Fed minutes also suggest greater difficulty in predicting economic data in the medium term according to the members of the Board. Technically, the European currency is marking a pause in its downward trend and should continue to stabilize while awaiting new macroeconomic developments.

MEDIUM TERM FORECAST

Considering the key graphical factors that we have mentioned, our opinion is neutral in the medium term on the Euro Dollar (EURUSD).

We will maintain this neutral opinion as long as Euro Dollar (EURUSD) prices are positioned between support at 1.0550 USD and resistance at 1.0693 USD.

DAILY DATA CHART