EUR/USD: Forex traders are suspended from NFP (Non Farm Paryrolls)

(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.

Clearly, the single currency is suffering against the Dollar at the turn of 2023, while the appetite for risk contracts as geopolitical tensions increase in multiple parts of the globe and as operators return to more realism on the rate cut schedule.

On the geopolitical field, tensions are also legion, particularly in the Middle East with the liquidation in Lebanon of the number two of the political branch of Hamas, an attack in Iran and new attacks in the Red Sea. The closure of a major oil field in Libya adds additional pressure on the supply of black gold.

The CME’s FedWatch tool now puts the probability of a reduction in federal key rates at 66% in March, while this figure peaked at 84% at the end of 2023. The tool is developed by CME Group (from the merger of the Chicago Mercantile Exchange (CME) and the Chicago Board of Trade (CBOT)) based on Fed Funds futures.

The Fed’s “Minutes”, published Wednesday evening, somewhat confirmed this. This traditional report from the Fed’s last monetary policy meeting. In a word, the markets are returning to more realism about the timetable for rate cuts. Especially on the first. The Federal Reserve’s minutes, published after the European markets closed, set the record straight a little. They showed that its members are overall much less confident than the market in the scenario of a first monetary easing from March.

In this context, the yields on 10-year US Treasury bonds, which had fallen massively at the end of the year, once again flirted with the 4% threshold, causing tension. It will also be interesting to see, if any, the impact of the publication, at 2:30 p.m., of the NFP report on American employment in December. The fear of seeing employment experience renewed tension is palpable after the publication this week of numerous figures on private employment, first and foremost the ADP firm survey and weekly registrations for unemployment benefits. The first highlighted much greater job creation than expected and the second once again flirted with the floor of 200,000 new units.

To follow, therefore, as a priority, the NFP report (for Non Farm Payrolls), at 2:30 p.m. Here are the different consensuses: +0.3% for average hourly wages, 168,000 job creations, and an unemployment rate up slightly to 3.8% of the active population. Remember that the scope of this report is private non-agricultural employment.

At midday on the foreign exchange market, the Euro was trading against $1.0910 approximately.

KEY GRAPHIC ELEMENTS

A potential decline is emerging towards the 50-day long average (in orange), the direction of which remains clearly bullish. His test will also be rich in lessons.

MEDIUM TERM FORECAST

Considering the key graphical factors that we have mentioned, our opinion is negative in the medium term on the Euro Dollar (EURUSD).

Our entry point is at 1.0911 USD. The price target for our bearish scenario is at 1.0694 USD. To preserve the invested capital, we advise you to position a protective stop at 1.1013 USD.

The expected profitability of this Forex strategy is 217 pips and the risk of loss is 102 pips.

DAILY DATA CHART