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The Euro, against the Dollar, remained on the defensive ahead of important American macroeconomic figures on Thursday and Friday. The macroeconomic agenda finally expanded a little on Tuesday. Among the indicators published, we will cite not orders for durable goods, nor the Case Schiller real estate index due to their proximity to the consensus, but the consumer confidence index (Conference Board), stable at 104.7 then that the financial community aimed much higher.
As we mentioned, the rest of the week will be marked by the publication of new GDP data on Thursday and, above all, PCE prices, the Fed’s favorite barometer, on Friday.
Concerning American growth, “there is almost no doubt that the GDP of the United States will continue to expand during the first half of 2024. We also estimate that American activity should grow in 2024 at a rapid pace. close to its potential, in other words in a range between 1.8% and 2.0%”, for Mabrouk Chetouane, Head of Global Market Strategy at Natixis Investment Managers.
For the first quarter on an annualized basis, GDP is expected to increase by 3.2%.
The Euro/Dollar currency pair was upset last week, subject to opposing forces. On the one hand, the willingness of the major central banks to begin their cycle of rate cuts this year puts pressure on the single currency, whose “remuneration”, dynamic against the Dollar, risks diminishing. Indeed, and this would be a historic first, the European Central Bank could get ahead of its American counterpart, the Fed, in starting to loosen the monetary tap. On the other hand, the risk appetite still palpable on the markets favors the single currency against the safe haven Dollar.
As for PCE (personal consumption expenditures) prices, they are expected to increase monthly by 0.3%, excluding food and energy. Coincidentally, J Powell, the head of the Fed, is due to participate a few hours later in an interview conducted by Kai Ryssdal, the host of ‘Marketplace’ during the conference on macroeconomics and monetary policy, in San Francisco . Questions from the public are expected.
To be monitored at 4:30 p.m. this Wednesday, crude stocks in the United States.
At midday on the foreign exchange market, the Euro was trading against $1.0830 approximately.
KEY GRAPHIC ELEMENTS
Consistent with our previous papers, we build a bullish position, which we maintain as long as the 20-day moving average (in dark blue) gravitates above the 50-day moving average (in orange). The difference between these two curves is small.
MEDIUM TERM FORECAST
Considering the key graphical factors that we have mentioned, our opinion is positive in the medium term on the Euro Dollar (EURUSD).
Our entry point is at 1.0833 USD. The price target for our bullish scenario is $1.1143. To preserve the capital invested, we advise you to position a protective stop at 1.0739 USD.
The expected profitability of this Forex strategy is 310 pips and the risk of loss is 94 pips.
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