EUR/USD: Persistent pressure on the single currency

(News Bulletin 247) – This article, with open access, is produced by the stock market analysis and strategy research team at News Bulletin 247. To ensure you don’t miss any opportunities, consult all the analyzes and discover our portfolios by accessing our Privileges area.

The single currency had difficulty finding support on the lower limit of the Bollinger bands, the appetite for risk remaining thwarted by the geopolitical situation in the Middle East. Latest episode to date, Israel’s possible response, with a drone attack in central Iran in the immediate vicinity of a military base. The Israeli military has made no comments at this stage. But American diplomatic officials cited by American media reported that Washington had been warned by Israel of an attack on Iran, without approving this operation.

Since the intermediate high points of March 8, the currency pair has lost 325 pips, also penalized by the completely evaporated prospects of a rapid reduction in federal rates.

The week ahead will be relatively poor in major statistical benchmarks that can directly influence the currency pair. But from Thursday, everything will accelerate with the publication of the very first estimates of GDP for the first quarter in the United States. Then the next day the PCE prices will be published (personal consumption expenditures), the Fed’s preferred barometer in its assessment of price increases.

“The calculation methodology is very different from that of the consumer price index (CPI),” explains Christopher Dembik, investment strategy advisor at Pictet AM. “Therefore, the strong inflationary pressures observable in the latest CPI publication should not be perceptible in the PCE core. This does not change the situation from a monetary policy perspective across the Atlantic.”

“Jerome Powell was clear last Tuesday: “If inflation persists, the Fed can keep the rate level unchanged for as long as necessary”. It is certain that the American Federal Reserve will lower its rates later than most banks G10 power stations.”

Furthermore, the season of quarterly results from large groups will intensify on both sides of the Atlantic, with in particular the copies of some members of the Magnificent 7: Microsoft and Alphabet. Other tech giants will publish such as Intel or Qualcomm.

At midday on the foreign exchange market, the Euro was trading against $1.0650 approximately.

KEY GRAPHIC ELEMENTS

THE pullback very clear Thursday 04/18 on a resistance zone ($1.0693) will invite people to take short positions again on the EURUSD currency pair, especially as the break of the 50-day moving average (in orange) by its counterpart at 20 days (in dark blue) was made at a relatively large angle.

MEDIUM TERM FORECAST

Considering the key graphical factors that we have mentioned, our opinion is negative in the medium term on the Euro Dollar (EURUSD).

Our entry point is at 1.0659 USD. The price target for our bearish scenario is at 1.0301 USD. To preserve the invested capital, we advise you to position a protective stop at 1.0751 USD.

The expected profitability of this Forex strategy is 358 pips and the risk of loss is 92 pips.

DAILY DATA CHART