EUR/USD: The single currency regains color

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The Euro, a currency barometer of the appetite for risk on the financial markets, continued its rebound against the Dollar, regaining its 50-day moving average with significant volatility. This reversal of steam was fueled at the end of last week by the publication of a federal NFP report which clearly showed an easing of tensions on the private employment market.

All the components of the report came out well short of their respective targets. The unemployment rate, first of all, expected to be stable at 3.8%, has actually increased slightly to 3.9% of the active population. Average hourly wages do not increase by 0.3% monthly, as the consensus predicted, but only by 0.2%. Finally – and the figure is spectacular – job creations collapse by half (150,000 in October compared to 297,000 in September), again far from the target, close to 175,000.

A publication which should therefore reassure the Fed in its message, without formally excluding the option of a final increase in key rates. The CME Group’s FedWatch tool also allocates a probability – low but not negligible – of 10% to this scenario. This federal publication, the statistical highlight of the week, did not hinder the easing movement at work on the bond market initiated since Thursday and the Fed’s declarations. Quite the contrary since the American employment report lends credibility to the thesis that the rates of the American institution have reached their peak.

In the immediate term, on the statistical side, the single currency is supported by the Sentix investor confidence index, which although still clearly in negative territory (-18.6), came out above the target. The institute insists on the German contribution to the final score.

No surprises on the final data of the PMI activity indicator in services in final data for October, at 47.8 points for the entire Euro Zone

At midday on the foreign exchange market, the Euro was trading against $1.0750 approximately.

KEY GRAPHIC ELEMENTS

The 20-day moving average (in dark blue) is in phase, at a significant angle, of reconquering the 50-day long moving average (in orange), even though these two trend lines have not met since the August 17. The bearish message is therefore no longer so clear.

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 1.0693 USD and resistance at 1.0792 USD.

DAILY DATA CHART