EUR/USD: Rate cuts are moving away

KEY GRAPHIC ELEMENTS

The European currency remains under downward pressure while rate cuts from the American central bank fade away. Indeed, until now, the majority of investors were betting on a rate cut from next March. Today, less than half believe in this possibility, according to the CME index. As for Japan, the Japanese central bank has maintained its accommodating monetary policy. Members of the central bank want to give themselves more time to assess inflation and in particular wage increases. BOJ Governor Kazuo Ueda said many companies had made advance decisions on wages and unions were demanding higher wages. In the United States, the latest macroeconomic data indicates a still strong American economy, insensitive to rates, with unemployment at its lowest and a very present consumer as can be seen in retail sales which came out above expectations last week. At the end of the week, major information will be published, namely the American Gross Domestic Product and the PCE price index, an inflation index favored by the American central bank to make its decisions. If the data came out below expectations, the dollar would weaken and the euro would rebound towards its upper limit in the 1.10 or even 1.11 zone. This zone is still active for short-term and medium-term sales in order to target the lower part of this wide range located at 1.07.

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 1.0889 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 189 pips and the risk of loss is 269 pips.

DAILY DATA CHART