(News Bulletin 247) – Two antagonistic forces remained at work on the Euro / Dollar currency pair: on the one hand the tone of the “Minutes” of the Fed, a little less “aggressive” than anticipated without however upsetting the matrix monetary policy, and on the other hand the difficulty of regaining appetite for risk in the ultra-tense geopolitical context between NATO and Moscow, the first requiring from the second formal proof of a massive withdrawal of Russian troops at the Ukrainian border, thereby refusing to speak of de-escalation. Result: strong pressure on both components of the currency pair.
While affirming that a diplomatic solution remains possible, the President of the United States now considers the threat of a Russian invasion of Ukraine to be “very high”. Before the UN Security Council, Secretary of State Anthony Blinken said yesterday afternoon that Russian forces are preparing to launch an offensive “in the days to come”, adding that Moscow is looking for a pretext to trigger the hostilities. “I am here today not to start a war, but to prevent one,” he also said.
Yesterday in the statistics chapter, targets missed for the two main statistical publications of the day: weekly unemployment benefit registrations for week 06, approaching 250,000 new registrations, and the Philadelphia Fed manufacturing index (Philly Fed index), down sharply to 16 points. The Dollar remains however supported by the figures on real consumption (which contradict the deterioration in consumer confidence), published earlier in the week. Remember that retail sales for the month of January jumped 3.8% month-on-month, well above expectations.
To follow in priority, on the agenda this Friday, at 4:00 p.m., the consumer confidence index in the Euro Zone and sales of old homes in the United States.
At midday on the foreign exchange market, the Euro was trading against $1.1370 about.
KEY GRAPHIC ELEMENTS
For the first time since June 16 (then on a sudden break), the spot was close to its 100-day moving average (in orange), the underlying trend line still very significantly bearish. The much broader consolidation has taken 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 6884.0000 USD and the resistance at 7086.0000 USD.
CHART IN DAILY DATA
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