EUR/USD: ECB Governing Council and American employment on the menu

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The relief caused by the publication, on Friday, of PCE prices that were rather moderate in their dynamics, will have allowed the Euro/Dollar currency pair to find a point of balance at the heart of the Bollinger bands which are now tightening.

These prices, the barometer of choice for the Fed, did not contain any unpleasant surprises, with prices increasing by 0.2% monthly, excluding food and energy, below the consensus of +0.3%. A figure which somewhat calms a market made nervous by a burst of recent statistical publications showing a warming of the American economy, in terms of employment and consumption in particular.

American employment, still under pressure, will be particularly monitored this week with numerous publications: new JOLTS job offers, weekly registrations for unemployment benefits, and especially the survey by the private firm ADP and the federal NFP report, in culmination Friday.

Also this week, currency traders will have to deal with a Council of Governors of the ECB which should result, barring any major surprises, in a first reduction in key rates, therefore one step ahead of the United States. A drop of minimum magnitude (25 bps), which would satisfy the expectations of an impatient market. Nomura’s European economists also predict that “Ms. Lagarde should emphasize the dependence on data and adopt a meeting-by-meeting approach”; that “the ECB will slightly raise its GDP growth and inflation projections this year and next, while leaving 2026 unchanged”; and that “with cuts of around 60 basis points by the end of 2024, we believe the June ECB meeting and press conference will prove downbeat compared to market expectations.”

To follow the American manufacturing ISM at 4:00 p.m. this Monday. On this side of the Atlantic, the final industrial PMI data in the Euro Zone did not deviate from the first estimates.

At midday on the foreign exchange market, the Euro was trading against $1.0840 approximately.

KEY GRAPHIC ELEMENTS

The currency pair recorded a double top at $1.0885 which further asserts itself as a resistance level, below which the bearish bias can regain its rights. Especially in the event of rapid reintegration of the lower part to an oblique (drawn in black), a major graphic reference point.

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