EUR/USD: Digestion after crossing the technical threshold

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Calmly, the Euro/Dollar currency pair consolidated above a major technical level, a bearish oblique crossed energetically on May 15, in the wake of publication of reassuring figures on American inflation.

As a reminder, excluding food and energy, these consumer prices increased across the Atlantic in April by 0.3%, moderately therefore, and in line with the target. Over one year, these prices increased by 3.6%, compared to 3.8% the previous month.

Enough to cause an accentuation of the ebb movement on the American 10-year, now back at 4.41, after having touched 4.33. This also brings relief to Fed executives, who have more arguments in their possession to leave the door open to a scenario of two cuts in Fed Funds by the end of the year.

There was also talk of inflation on Friday May 17, on this side of the Atlantic. Forex traders have digested the final consumer price data in April, for the Euro Zone this time, which EuroStat, the statistical office of the European Union, has just published. No deviation to report compared to the first estimates. Excluding food, energy, alcohol and tobacco, prices increased by 2.7% annually. Figures which are stable compared to March.

The forex traders’ week is starting very calmly, in the absence of major indicators. A week which will, however, be marked by various speeches, or speeches by monetary officials, in particular Fed executives, whose language elements will undoubtedly be scrutinized. We will have to wait until Wednesday for the calendar to thicken somewhat, with sales of old homes across the Atlantic, but especially Thursday with PMI activity indicators in the Euro Zone and the closely monitored weekly registrations for unemployment benefits.

At midday on the foreign exchange market, the Euro was trading against $1.0870 approximately.

KEY GRAPHIC ELEMENTS

On marubozu of great magnitude, the currency pair shattered the technical resistance level constituted by the bearish oblique drawn in black. A recovery is underway, which may ultimately result in a pullback. The conditions in terms of entry point are not met to immediately build a position on the currency pair.

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 1.0758 USD and resistance at 1.0885 USD.

DAILY DATA CHART