EUR/USD: PMI without impact, focus on PCE

KEY GRAPHIC ELEMENTS

Investors welcomed the publication of PMIs in Europe this morning. The result comes out in half. Indeed, for Germany, France and the euro zone the manufacturing PMIs all came out above expectations but all the services PMIs disappointed. The most optimistic will see a restart of the economy, particularly in sectors which were in difficulty, and a potential easing of inflation with Services PMIs easing. This information is published after a week since the market has now potentially known the timing of the European Central Bank regarding its future rate cuts, namely from next summer. Concerning the American central bank, investors until now estimated that the Fed would lower its rates next March. However, this probability is now shifted to May according to the CME index. Forex traders are awaiting the publication of the American Gross Domestic Product at the end of the week as well as the PCE index, an inflation index favored by the Fed to make its decisions. Technically the European currency continues its slow consolidation. Any rebound on the upper limit of the range which provides resistance in the 1.10/1.11 zone would constitute a selling opportunity towards 1.07.

MEDIUM TERM FORECAST

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

Our entry point is at 1.0885 USD. The price target for our bullish 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 185 pips and the risk of loss is 273 pips.

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