EUR/USD: Thank you Ms. Lagarde

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The Euro, one of the benchmark barometers of risk appetite on financial markets, resumed a moderately bullish bias, in the wake of the European monetary policy meeting concluded yesterday. Unsurprisingly, the ECB did not move its key rates, but the downward revision of growth, like the confidence in a return to inflation of 2% from next year, pleased the markets. The flagship equity index of the second largest economic power in the Euro Zone even managed to overcome a major psychological threshold, 8,000 points.

“The downward revision of its economic outlook was the key information of the meeting […] of the ECB, because its long-term inflation forecast reaches its target of 2%, which means that the ECB can start to lower its key rates”, for Patrick Barbe, Head of European Investment Grade Fixed Income at Neuberger Berman. “Nevertheless, Ms. Lagarde explained that more information was needed because she is not yet “sufficiently confident” about progress in reducing inflation.”

The door is therefore open for June, while keeping a close eye on the evolution of salaries.

[Mme Lagarde] “remains particularly vigilant on the evolution of wages and corporate profits and will know a little more in April, but much more in June. Surprisingly, it downplayed the fact that its monetary policy is “dependent on data”, which means that the conditions for reducing rates are already in place, which implies that the market should react positively, with lower rates as well as credit spreads.

Forex traders will now be able to look ahead to the publication this Friday of the NFP (Non Farm Payrolls) report on the state of health of American employment. After more than 350,000 positions created in January in the private sector (excluding agriculture), the consensus does not exceed 200,000 for the month of February. The Fed will be sensitive to any confirmation of tensions on private employment, after confirmation, by the PCEs last week, that the return to the inflation target is not a linear path… As a preview, this week, currency traders learned of new job offers (JOLTS), the results of the survey by the private human resources firm ADP, and weekly registrations for unemployment benefits. All these indicators, reassuringly, were quite in line with expectations.

See you at 2:30 p.m. for the publication of this NFP.

At midday on the foreign exchange market, the Euro was trading against $1.0930 approximately.

KEY GRAPHIC ELEMENTS

The upward crossing of the 20-day moving average (in dark blue) over its 50-day counterpart (in orange), if it were to happen quickly, would give the signal for the construction of a long position on the pair of currencies. Alerts are scheduled.

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