EUR/USD: Bearish pressure returns

KEY GRAPHIC ELEMENTS

The comments of members of the European Central Bank and the American Central Bank are once again bringing volatility to the foreign exchange markets. Indeed, while the recent macroeconomic information published is negative, particularly with Germany’s gross domestic product (GDP) falling by 0.3% over the whole of 2023, Philip Lane, the bank’s chief economist European Central, however indicated that rates should not fall too quickly because this could fuel a resumption of inflation. Furthermore, Christopher Waller indicated that he was convinced that the current level of rates was “well positioned” to bring inflation back to 2%. These comments weigh on the euro which was dragging gold into its fall while the dollar is strengthening. For the moment, investors continue to believe in a rate cut by the American central bank next March with more than 70% probability. In addition, geopolitical uncertainties, with the strikes carried out in the Middle East against the Houthi rebels, are weighing on the trend and favoring the dollar as a safe haven. Technically the euro is still stuck under significant resistance. A decline in the euro towards 1.07 is favored.

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 1.0895 USD. The price target for our bearish scenario is at 1.0700 USD. To preserve the invested capital, we advise you to position a protective stop at 1.1158 USD.

The expected profitability of this Forex strategy is 195 pips and the risk of loss is 263 pips.

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