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After a strong rebound at the heart of the week, the Euro/Dollar currency pair is putting the handbrake on as the publication this Friday approaches the highly anticipated report on private employment in the United States, a report which could come on if necessary, modulate the tone of speeches by Fed executives. The latter – at least those who have spoken since the end of last week, have clearly insisted on the fact that the Federal Reserve has time before pressing the button to cut rates. And that once started, this decline would not be continuous. Understand: there will be levels.
Concerning this NFP (Non Farm Payrolls), if the unemployment rate is expected to be stable at 3.9% of the active population, the number of job creations is expected to drop sharply to 205,000. The increase in hourly wages on a monthly basis is expected at 0.3% in March, compared to 0.1% in February. This last figure will be studied closely…
On the macroeconomic side yesterday, note that the ISM Services, in final data for March in the Euro Zone published yesterday morning, slightly exceeded the first estimates, coming out at 51.5 points. Furthermore, new weekly registrations for unemployment benefits in the United States totaled 221,000, very slightly above the consensus.
Furthermore, the heightened geopolitical tensions between Israel and Iran are weighing on all risk assets this morning, of which the single currency is naturally a part. Iran’s Supreme Leader Ayatollah Khamenei said on Wednesday that Israel would be “slapped” after the air strikes attributed to it on the consular annex of the Iranian embassy in Damascus, in which seven Guards died on Monday. the revolution.
The ECB will meet its Governing Council next week. A status quo on key rates is widely expected. Nomura strategists do not foresee “any change in ECB policy, nor any major change in the broad strategic orientations. The first cut is expected to take place in June, but we expect Ms. Lagarde to make clear that the ECB remains dependent on data.”
As a reminder, rather encouraging figures on inflation in the Euro Zone were published the day before yesterday. Excluding volatile elements (food, energy, alcohol and tobacco), prices increased in March at an annualized rate of 2.9% compared to 3.0% expected and February at 3.1%. A slowdown in inflation confirmed, therefore, on this side of the Atlantic.
To be followed first on the agenda this Friday, the NFP (Non Farm Payrolls) report, at 2:30 p.m.
KEY GRAPHIC ELEMENTS
While the currency pair regains support on the lower limit of the Bollinger bands (20;2.5) and the 20-day moving average (in dark blue) still gravitates above its 50-day counterpart (in orange ), the opinion remains bullish. We will target the upper Bollinger band, currently in the immediate vicinity of $1.1 per €.
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 1.0840 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 1.0734 USD.
The expected profitability of this Forex strategy is 303 pips and the risk of loss is 106 pips.
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