EUR/USD: Unfavorable breeding ground for the single currency

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The drop in the Euro/Dollar currency pair, which began on Wednesday April 10 in the wake of worrying inflation figures in the United States, continues with the further rise in geopolitical tensions in the Middle East. Iran launched a massive attack using drones and missiles against Israel on the night of Saturday April 13 to Sunday April 14. The international community is trying to coordinate its diplomatic efforts to encourage de-escalation and avoid conflagration in the Middle East.

Forex traders also have to deal with a downward revision in the number of loosening of the monetary tap for the current year, on both sides of the Atlantic. The ECB, however, seems to have greater room for maneuver.

“At the ECB meeting, little information was given on cuts beyond June; this will likely depend on the persistence of inflation. A cut in June still seems likely, despite the strength of inflation of services”, for the economists at Nomura.

“Lagarde was reassured by the current trajectory of inflation and noted that not all components of inflation need to reach 2%. The Sentix survey was significantly more robust, which points to further improvement in PMI indices as the Euro economy recovers.”

In terms of macroeconomics on Friday, there was little to eat apart from preliminary data from the American consumer confidence index (U-Mich), which came out below expectations at 77.9. On the agenda this Monday, to primarily follow retail sales in the United States as well as the Empire State index at 2:30 p.m.

At midday on the foreign exchange market, the Euro was trading against $1.0660 approximately.

KEY GRAPHIC ELEMENTS

The very sharp downward movement of the Euro/Dollar following the publication of inflationary figures in the United States unlocked our stop at $1.0767. We prefer to stay out of the spot immediately, waiting for a clearer technical signal. The test of an intermediate support zone at $1.0693 could potentially be instructive.

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 1.0550 USD and resistance at 1.0885 USD.

DAILY DATA CHART