EUR/USD: Triangle Chart Pattern

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The graphical configuration of the Euro, against the Dollar, looked more and more like a bearish triangle model, developed above $1.0690, a level weakened as concerns focused, for different reasons on the two main economic powers in the Euro Zone: Germany and France.

“First of all we find Germany and its still depressed manufacturing sector,” for Thomas Giudici, head of bond management at Auris Gestion. “In addition to the drop in demand, the morale of business leaders is probably also impacted by the renewed tensions with China, on which the country is particularly dependent.”

“The second country is none other than France,” continues the manager. “Quite logically, the uncertainties linked to the political situation penalize the activity prospects of purchasing managers. From the point of view of the financial markets, none of the scenarios currently on the table seem really favorable to a return to favor of French assets Currently, the question is therefore more whether the correction observed in French stocks fully integrates the probable first place (majority or relative) of the National Rally.”

The first round of the legislative vote is being held this Sunday, and the second, Sunday July 7.

In the statistical chapter on Tuesday, attention turned to the publication of the consumer confidence index (Conference Board), expected to fall very slightly to 100 points, and came out very close to this target. New home sales are expected this afternoon, before the final quarterly GDP data on Thursday and PCE prices on Friday, as the highlight. On the latter point, this is the Fed’s preferred measure in its “assessment” of price dynamics. Weekly unemployment benefit registrations will also be scrutinized tomorrow, as their chronic weakness around 220,000 suggests continued tensions on employment, tensions which themselves generate inflation.

According to the CME Group’s FedWatch tool, a scenario of federal rate cuts in September has almost a 68% chance of happening. The tool, as a reminder, makes it possible to quantify and analyze the probabilities of changes in federal rates and American monetary policy based on the price of 30-day federal funds futures contracts. This is a valuable and complementary tool to the dot plot diagram.

At midday on the foreign exchange market, the Euro was trading against $1.0690 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. This test is in progress, in conditions of volatility which challenge. Negative review maintainedespecially since the pattern (graphic model) developed increasingly resembles a bearish triangle.

MEDIUM TERM FORECAST

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

Our entry point is at 1.0684 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 1.0801 USD.

The expected profitability of this Forex strategy is 248 pips and the risk of loss is 117 pips.

DAILY DATA CHART