EUR/USD: Dismal oscillations around $1.0550

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The Euro/Dollar, one of the most significant markers of risk appetite in financial markets, remained in a congestion phase below its 50-day long moving average (in orange), failing to capitalize on the very recent publications, at the start of the week, on inflation in the Euro Zone. The downtrend remains the framework.

As a reminder, in “core” data (including the volatile elements of food, energy, tobacco and alcohol), prices in the Euro Zone increased by 4.2% in October, according to all first estimates from EuroStat, marking a clear slowdown compared to September (+4.5%)

“It is unlikely that in the future inflation will continue to fall so rapidly and surprise on the downside in the coming months,” said Sebastian Vismara, senior economist and strategist at BNY Mellon IM. “Energy inflation is expected to pick up in November and December due to strong base effects, and services inflation may remain stable, with survey data suggesting the decline in this component may stop in the coming months”.

On the American side, today’s program is busy, both on the monetary and macroeconomic levels.

The Fed is completing a new Monetary Policy Committee this Wednesday, which should result, barring any surprises, in a status quo on the remuneration of the Fed Funds, in a range between 5.25% and 5.50%. However, the opportunity will be interesting, at a press conference, to see to what extent the Monetary Institution is now ready to engage sustainably in a plateau phase.

The American 10-year remained below 5% at 4.904.

On the statistical agenda this Wednesday, to follow as a priority, across the Atlantic, the results of the survey by the human resources firm ADP at 1:15 p.m., the manufacturing ISM at 3:00 p.m., new job offers (JOLTS) also at 3:00 p.m. , as well as the outcome of the Fed’s FOMC (decision at 7:00 p.m. and press conference at 7:30 p.m.). A status quo on the remuneration of Fed Funds is almost certain, the option having a probability of almost 98% according to the CME FedWatch tool.

“The decline in American inflation continues but at a moderate pace. The target of a 2% price increase is still far away, hence persistent uncertainty over the future action of the Federal Reserve. Should it continue its rate increases at the risk of causing sometimes brutal collateral damage?” asks Emmanuel Auboyneau, AMPLEGEST Associate Manager. “Or on the contrary must it now wait for previous rate increases to act on the economy, with the usual delays? There are numerous debates within the institution between the hawks and the doves. The Central Bank will remain focused on next figures and will be pragmatic.”

At midday on the foreign exchange market, the Euro was trading against $1.0545 approximately.

KEY GRAPHIC ELEMENTS

The framework remains bearish, as long as the 20-day moving average (in dark blue) gravitates below its 50-day counterpart (in orange). In the short term, we are in a phase of congestion under the long moving average, the structure of which does not suggest a clear rebound.

MEDIUM TERM FORECAST

Considering the key graphical factors that we have mentioned, our opinion is neutral in the short term, and negative 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 1.0435 USD and resistance at 1.0693 USD.

DAILY DATA CHART