EUR/USD: Publication of PCEs Thursday, 2:30 p.m., the appointment is made…

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Momentarily, NVidia’s excellent quarterly report will have infused even the exchange rates, where the Euro, the reference barometer of risk appetite, will have accelerated against the Dollar, after crossing its 20-day moving average. In the immediate future, forces tend to balance around a pivot zone close to $1.80.

Forex traders will note two important meetings this week on the macroeconomic front, capable of having an influence on the American monetary calendar in the event of a very strong deviation from the consensus: the first is expected tomorrow, it is the he consumer confidence index, the second, even more important, is the PCE index, the Fed’s preferred measure in its assessment of inflation. However, we have seen it with the recent publication of consumer price indices across the Atlantic: the return to “normal” inflation is not a perfectly straight and passable path.

As a reminder, and in detail, prices across the Atlantic published in the middle of the month, food and energy included, increased at an annual rate of 3.1%, i.e. a much less significant slowdown in inflation than the target would suggest, at 2.9%. Enough to further reduce hopes of cumulative declines in Fed Funds yields over the year 2024. The firmness (understanding the persistent tensions) on the job market, as well as the thorny issue of rents (they are part of the calculation methodology) largely explain these worrying figures.

So-called core inflation, which excludes volatile food and energy prices, remains stable at 3.9% over one year, where the consensus compiled by the Wal Street Journal also counted on a weaker progression, of 3.7%.

Alexandre Baradez (IG France) notes that “Thomas Barkin, the president of the Richmond Fed […] recognized that the slowdown in inflation so far has mainly occurred via goods in particular but that the part linked to services/housing remained sticky. Although he indicated that one should not necessarily place too much importance on a single month’s data, he still acknowledged that CPI and PPI data did not “make things easier” and even that this made them “more difficult”…”

See you Thursday at 2:30 p.m. for the publication of the PCEs.

On the European side, the greatest prudence in monetary policy prevails. “The ECB minutes highlighted that the ECB Governing Council […] is more worried about a too early rate cut), and supports a later cut rather than risking the political error of a premature rate cut which would lead to a resurgence of inflationary pressures.” summarizes Nomura analysts.

On the agenda this Monday, to follow in priority the sales of new homes in the United States at 4:00 p.m. and a speech by Ms. Lagarde, President of the ECB, at 5:00 p.m.

At midday on the foreign exchange market, the Euro was trading against $1.0850 approximately.

KEY GRAPHIC ELEMENTS

The 20-day moving average (in dark blue), which until now conveniently served us as a trailing stop, has been clearly exceeded. We therefore no longer offer short positions, and remain on the lookout for a new attractive entry point.

MEDIUM TERM FORECAST

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

We will maintain this neutral opinion as long as Euro Dollar (EURUSD) prices are positioned between support at 1.0810 USD and resistance at 1.0940 USD.

DAILY DATA CHART