EUR/USD: Central banks put downward pressure

KEY GRAPHIC ELEMENTS

After Christopher Wallace declared that the American central bank should not rush into rate cuts, it is the turn of Robert Holzmann, for the European central bank to play the role of hawk by announcing that there was a possibility that the ECB will not lower its rates this year. This intervention penalizes the euro which was already under downward pressure since the comments of the chief economist of the European Central Bank, Philip Lane. Today, investors will have to stay close to the screens as numerous macroeconomic information will animate the foreign exchange market. Indeed, we first expect the publication of the inflation index for the euro zone at 11:00 a.m. French time, then at 2:30 p.m. American retail sales followed at 4:30 p.m. by a speech from Christine Lagarde. Finally, this evening the Beige Book of the American central bank, the Fed, will be communicated. Technically the euro has therefore failed as expected in recent days below the upper limit of its wide weekly range. We will therefore continue sales towards 1.07. A rebound off 1.10 would constitute a selling opportunity again.

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 1.0868 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 168 pips and the risk of loss is 290 pips.

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