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The Euro/Dollar currency pair showed firmness on the home stretch of the week, firmness appreciable by the very structure of its consolidation of Tuesday’s advance. A short pennant / flag is drawn on the high end of the long candle of November 14, a candle built on a bullish runaway following the publication of American inflation showing clear and tangible signs of slowdown.
A slowdown in the economic machine as a whole which was confirmed the next day and the day after with the producer price indices, industrial production and weekly registrations for unemployment benefits.
As a reminder, the monthly consumer price indices (CPI), regardless of the product base chosen, all came out below expectations on Wednesday. Compared to October 2022 in particular, all products combined, inflation now stands at +3.2% compared to +3.7% the previous month, below the target at +3.3%, according to the latest data published by the Department of Labor.
Better yet, so-called “core” inflation, that is to say excluding the price of food and energy, stood at 4.0% over one year, the lowest for more than two years. years. Tuesday’s statistic further distances the prospect of a rate hike from the US Federal Reserve.
On this side of the Atlantic, inflation, in final data for the month of October, was confirmed at +4.2% at an annualized rate excluding volatile elements, according to the latest EuroStat data. The figure is +2.9% including food, energy, alcohol and tobacco. The next publication of the flash estimate of euro area inflation, including data for November 2023, is scheduled for 30 November 2023.
At midday on the foreign exchange market, the Euro was trading against $1.0870 approximately.
KEY GRAPHIC ELEMENTS
The structure of the consolidation after the candle in marubozu white mentioned above will be rich in lessons. The absence of bullish extension this morning suggests the formation of a consolidation on the upper part of the elongated body. A flag (pennant or flag) is the preferred option. A bullish entry point would then emerge.
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 1.0792 USD and resistance at 1.0929 USD.
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