EUR/USD: A moving average under close surveillance

(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 main meeting of currency traders yesterday, namely the publication of the PCE (personal consumption expenditures) price index, will not have contained any surprises. The Fed’s preferred barometer in its assessment of inflation came out at +0.4% on a monthly basis, i.e. a level consistent with the target, compared to +0.2% for the previous month.

This statistical highlight of the week came out in line with expectations, corroborating the idea of ​​a slight jump in inflation, part of an underlying dynamic of a return to “normal”. In any case, the stated objective of 2% is clearly not a straight path, and the Fed will have to be patient.

“The level of 2% to be reached is complicated and uncertain” for Emmanuel Auboyneau, Amplegest partner. “In addition to a possible rise in raw materials boosted by economic growth, it is above all wages which are the key variable. After a lull of several months, they have recently resumed the upward trend, which is consistent with the strength of the job market. Furthermore, rents which constitute 30% of the price index have stabilized but remain subject to the structural shortage of housing in the United States.

The CME’s FedWatch tool puts the probability of a rate cut on May 1 at the end of the FOMC at 25.8%.

M Auboyneau remains convinced “that 2024 will be the year when the rate cut begins, but in a moderate way and only from the second half of the year.”

On this side of the Atlantic, it is the PMI activity barometer indicators that liven up the morning. In final data for the month of February, the industrial PMI in the Euro Zone stood at 46.50, slightly above the first estimates.

Dr. Cyrus de la Rubia, Chief Economist at the Hamburg Commercial Bank, provided the following insights: “the economic situation remained unfavorable in February in the manufacturing sector of the euro zone, which has been in recession for a year already. fell again, at the same rate as in January, as the overall decline in activity across the region was mainly the result of sharp contractions in Germany and France. Among the region’s four main economies, only Spain returned to growth in the middle of the first quarter. On a slightly more positive note, the decline in new orders eased somewhat in the euro zone, providing a glimmer of hope that demand will soon recover .”

At midday on the foreign exchange market, the Euro was trading against $1.0810 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. If the spot were to break its 20-day moving average in a significant level of volatility, we could then speak of a false exit since February 20. This dynamic level is to be monitored, therefore.

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