EUR/USD: The Euro sinks with the entry into a phase of uncertainty

(News Bulletin 247) – The Euro, one of the benchmark barometers of risk appetite on the financial markets, lost against the Dollar more than a hundred pips since the announcement by Valdimir Putin at dawn of military action in Ukraine. While refusing the term “occupation”, Russia bombs strategic and military targets, not only in the east of the country, but throughout Ukraine. The European Union, and in particular its first economic power, is very largely dependent on Russian natural gas for its supplies, hence the fear, and now the fear, of seeing the energy bill increase even more…

This act of war reshuffles the cards and will push the United States, more generally the members of NATO, and the European Union, to reinforce their economic and political sanctions against Russia. As a reminder, Chancellor Olaf Scholz has already decided to freeze the approval procedure for Nord Stream (gas pipeline linking Germany to Russia via the Baltic).

In terms of statistics yesterday, the various consumer price indices came out, in final data for January, at +2.3% in the Euro Zone, at an annualized rate, excluding volatile elements (food, energy, alcohol and tobacco). To be followed in priority, on the agenda this Thursday, the preliminary data of Q4 GDP in the United States at 2:30 p.m. and crude inventories across the Atlantic at 5:00 p.m. The WTI flirted this morning with the symbolic bar of $100.

At midday on the foreign exchange market, the Euro was trading against $1.1180.

KEY GRAPHIC ELEMENTS

The transition phase between February 4 and 23, in the form of a slip without federation, under the 100-day moving average (in orange) is over. The bottom bearish bias aligns with the short term, and the plot of a candle today, at this point at least, in marubozu black school, illustrates the firm grip of the sales camp. We are revising our bearish targets, to $1.10, then if necessary to $1.0856

MEDIUM TERM FORECAST

In view of the key graphic factors that we have mentioned, our opinion is negative in the medium term on the Euro Dollar (EURUSD).

Our entry point is at 1.1175 USD. The price target of our bearish scenario is at 1.0857 USD. To preserve the invested capital, we advise you to position a protective stop at 1.1261 USD.

The expected return of this Forex strategy is 318 pips and the risk of loss is 86 pips.

CHART IN DAILY DATA

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