EUR/USD: High(er) for longer…

(News Bulletin 247) – This article, with open access, is produced by the stock market analysis and strategy research team at News Bulletin 247. To ensure you don’t miss any opportunities, consult all the analyzes and discover our portfolios by accessing our Privileges area.

Without progress, in the absence of benchmarks this Monday, the Euro / Dollar currency pair is lateralizing, with currency traders digesting the speech considered restrictive by Mr. Powell at the end of last week, and the publication, tomorrow, of a valuable index allowing to measure the effectiveness at this stage of American monetary policy: monthly consumer prices.

Thursday evening, Jerome Powell put an end to the procrastination on so-called “terminal” rates, namely whether or not a peak on Fed Funds has already been reached. The Fed president clarified that his members were not convinced that key rates were high enough to fight inflation.

“The Fed is committed to implementing a sufficiently restrictive monetary policy to bring inflation down to 2% over time,” said Jerome Powell, who said he was not convinced “of having reached such a position.”

As for the European Central Bank, its president Christine Lagarde declared on Friday that the drop in rates was “not something that will happen in the coming quarters”, but added that maintaining key rates “should be enough to control inflation.”

“The money market expects that the Federal Reserve and the European Central Bank will lower their rates for the first time next June,” notes Christopher Dembik, investment strategy advisor at Pictet AM, who has a very different point of view. “It is likely that key rates will remain at their current level for longer than expected, in particular because inflation is unlikely to return to the 2% target over the next year and because growth, even “if it slows down, it will remain honorable. We estimate that GDP could grow by 1.0% in developed economies and by 2.2% globally in 2024.”

Wednesday’s session will also be decisive, with a battery of major American indicators led by the producer price index, the Empire State index and retail sales, among other celebrations.

At midday on the foreign exchange market, the Euro was trading against $1.0690 approximately.

KEY GRAPHIC ELEMENTS

The 20-day moving average (in dark blue) is in phase, at a significant angle, to reconquer 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. The neutral opinion will be kept immediately.

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 1.0792 USD.

DAILY DATA CHART