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The Euro/Dollar experienced an inflection point below its 50-day moving average (in orange) while monetary policies on both sides of the Atlantic could experience a phenomenon of “decorrelation”, according to the term used. by Emmanuel Auboyneau (Amplegest Associate Manager). On the one hand, “internal growth [des Etats-Unis] is still vigorous, particularly in services, while consumption of goods has not contributed. The job market shows no sign of weakness at this stage.”
On the other hand, “the European situation is not comparable with sluggish growth, even if it shows signs of trembling, and inflation quite close to the desired 2%. The European Central Bank therefore has more latitude to begin its cycle monetary easing.”
The scenario of a reduction in European rates before federal rates – which would constitute a historic first – should be seriously considered. Beyond that, it is the comparative trajectory of rate declines on both sides of the Atlantic which is in full redefinition.
“If a first rate cut [de la BCE] in June therefore seems to be materializing, the continuation of the monetary easing schedule remains uncertain at this stage”, nuance Romane Ballin (Auris Gestion). “The recent rebound in activity in Europe (GDP up 0.3% in Q1 in the euro zone) argues for a gradual and cautious approach. There are also numerous debates within the institution, with some worrying about the consequences for the exchange rate in the event of a prolonged divergence between key rates on both sides of the Atlantic.”
In terms of statistics yesterday, good news on the PMI Services activity barometer, in final data for the month of April, which stood at 53.3, above the first estimates for the entire Euro Zone. Investors also took note of the Sentix investor confidence index in the Euro Zone, up significantly to -3.6, above expectations.
In the immediate future, retail sales in the Euro Zone, up monthly by 0.8% in March, exceeded the consensus by 0.2 basis points.
At midday on the foreign exchange market, the Euro was trading against $1.0760 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 currency pair EURUSD, especially since the break of the 50-day moving average (in orange) by its 20-day counterpart (in dark blue) took place at a relatively large angle. The succession of high points (12/28, 03/08, 03/21, 04/09 and 04/26) is now clearly decreasing, under an oblique line of resistance (in black).
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 1.0759 USD. The price target for our bearish scenario is at 1.0436 USD. To preserve the invested capital, we advise you to position a protective stop at 1.0886 USD.
The expected profitability of this Forex strategy is 323 pips and the risk of loss is 127 pips.
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