EUR/USD: On a crest line before major deadlines

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As eyes turn with some anxiety to the release of US PCE prices tomorrow and to the first round of the French legislative elections on Sunday, risk appetite remained very contained on the exchanges, with the Euro/Dollar currency pair at the end of a bearish triangle near $1.07.

To follow at 2:30 p.m. weekly registrations for unemployment benefits across the Atlantic, as well as new weekly registrations for unemployment benefits. Valuable benchmarks both for operators and for the Fed, as tomorrow’s publication, as a statistical highlight, of PCE (personal consumption expenditures) prices, the Federal Reserve’s preferred measure in its assessment of dynamics, approaches. prices.

The market also digested this week the restrictive comments of the governor of the Federal Reserve (Fed), Michelle Bowman, who declared Tuesday that “we have not yet reached the point where it is appropriate to lower key rates “, according to Deutsche Bank.

According to the CME Group’s FedWatch tool, a scenario of federal rate cuts in September has almost a 62% chance of happening (compared to 68% at the start of the week). 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 $1.07 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 opinion maintainedespecially since the pattern (graphic model) developed resembles more and more a bearish triangle.

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 1.0698 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 262 pips and the risk of loss is 103 pips.

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