(News Bulletin 247) – The Euro, an active risk appetite barometer par excellence, regained some air against the Dollar as the geopolitical tensions between Moscow and NATO subsided, following the partial withdrawal of troops of Russian soldiers on the Ukrainian border.
Tuesday marked the return of statistics, with a dense program. RAS concerning the first estimates of quarterly GDP in the Euro Zone (+0.3% for Q4 from one quarter to the next), with no deviation from the consensus. On the other hand, the targets have been missed for the ZEW index of confidence in the German economy (54.3) and for the December trade deficit (-9.7 billion euros).
“Germany’s economic outlook continues to improve in February despite growing economic and political uncertainties. Financial market experts expect an easing of pandemic-related restrictions and an economic recovery in the first half of 2022. They still expect inflation to come down, albeit at a slower pace and from a higher level than in previous months, so more than 50% of experts now expect inflation rates to fall. ‘Short-term interest in the Eurozone will increase over the next six months,’ commented ZEW Chairman Professor Achim Wambach.
Across the Atlantic, while the producer price index (PPI excluding food and energy) came out above expectations, confirming the idea of inflation setting in, the New York Fed’s manufacturing index (so-called “Empire State” index) completely missed the target, at 3.1.
This Wednesday morning, currency traders made up for a rise (+1.2% month-on-month) much larger than expected in industrial production in the Euro Zone. To follow this afternoon the federal report on American industry at 3:15 p.m. (production volume and capacity utilization rate), but above all at 2:30 p.m. retail sales in the United States, a highly anticipated publication after the slack consumer confidence index (U-Mich).
“For the January retail sales figure, which will be released on Wednesday afternoon, the consensus is high, analysts expect a rebound of 2%. A figure below expectations would be quickly attributed to inflation and increase the pressure on the Fed to accelerate the normalization of its monetary policy…with the risk of seeing US rates tighten a little more and especially short-term rates, maintaining volatility on US stock market indices.” warns Alexandre Baradez (IG France).
At midday on the foreign exchange market, the Euro was trading against $1.1380 about.
KEY GRAPHIC ELEMENTS
For the first time since June 16 (then on sudden break), the spot was close to its 100-day moving average (in orange), the underlying trend line still very significantly bearish. My very broad consolidation took shape below $1.1460 which is a chart resistance level. The field is immediately open towards the lower limit of this very wide range, around $1.1115. Currency traders will however avoid taking an immediate position in the absence of a satisfactory entry point.
MEDIUM TERM FORECAST
In view of the key graphic factors that we have mentioned, our opinion is neutral in the medium term on the Euro Dollar (EURUSD).
We will keep this neutral opinion as long as the Euro Dollar (EURUSD) parity prices are positioned between the support at 1.1260 USD and the resistance at 1.1460 USD.
CHART IN DAILY DATA
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