EUR/USD: Waiting for the Fed Minutes

(News Bulletin 247) – This article, with open access, is produced by the stock market analysis and strategy research team at News Bulletin 247. To ensure you don’t miss any opportunities, consult all the analyzes and discover our portfolios by accessing our Privileges area.

The Euro was in a perilous situation in the short term against the Dollar, in contact with a 20-day moving average (in dark blue) which has acted as dynamic graphic resistance since the start of the year.

Currency traders, in need of guidance since last week’s publication of unappealing US inflation figures, are awaiting the publication at 8:00 p.m. (Paris time) of the Fed Minutes, a traditional chronological account of the debates. which took place during the last monetary policy meeting. This allows us to further refine the prospects for a reduction in federal rates for the year 2024. A first rate reduction in March has now been completely wiped out. As for the next deadline, the CME’s FedWatch tool puts the probability of finally seeing a first loosening of the monetary tap at 35.7%.

On the BCE side, we are moving towards a “puzzle” type of reflection. Because the powerful monetary institution headed by Ms. Lagarde does not have the luxury of being able to see so much coming, the health of the economy, particularly in Germany, not being up to the level of the thriving American economy. “The ECB’s speech over the past week suggests that the ECB is choosing a tailcoat, that is, the ECB wants to be cautious and wait before making cuts, and the ECB considers that the The risk of cutting too soon and seeing inflationary pressures re-emerge is worse than cutting too late and possibly having to make more aggressive cuts,” for Nomura economists.

At midday on the foreign exchange market, the Euro was trading against $1.0800 approximately.

KEY GRAPHIC ELEMENTS

The graphical and technical situation is trending below the 20-day moving average (in dark blue). However, the angle of attack is not very important. This trend line, which is accelerating downward, will conveniently serve as a trailing stop (trailing stop). In the immediate future, the acceleration in volatility reassures us in this graphic scenario. A new test of the aforementioned moving average is underway.

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 1.0798 USD. The price target for our bearish scenario is at 1.0436 USD. To preserve the invested capital, we advise you to position a protective stop at 1.0891 USD.

The expected profitability of this Forex strategy is 362 pips and the risk of loss is 93 pips.

DAILY DATA CHART