EUR/USD: US inflation in the crosshairs

KEY GRAPHIC ELEMENTS

Forex traders had a busy schedule yesterday, yet the impacts on the European currency were limited. Indeed, the European Central Bank did not cause any stir while the speech was dovish as expected. The European Central Bank kept interest rates unchanged. According to the statement communicated by the central bank “the prices of goods and services are no longer increasing as much. In the coming months, inflation is expected to fall further. But new conflicts and tensions in some parts of the world have made the future more uncertain.” Furthermore, investors were also awaiting the publication of American GDP, which had some surprises in store, but not favorable to the euro. Indeed, American GDP came out higher than expected. Strong consumer spending was the main driver of the 4.9% annual increase in gross domestic product. 10-year rates have been stable for several hours and rise together when they increase, having little impact on arbitrage between currencies. Today we will closely monitor at 2:30 p.m. the publication of the PCE index, an inflation index closely followed by the American central bank. An upward surprise would worry investors about further additional tightening by the Federal Reserve. Technically the European currency is still moving within its range. The reading presented for several weeks follows its scenario. We will therefore remain sellers in the event of a rebound towards 1.08 and we will look for purchases in the 1.04 zone.

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.

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