EUR/USD: In concert with the CAC and the DAX

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The Euro, against the Dollar, was in the same dynamic as that of the DAX or the CAC 40, in a market rather reassured by the trend, even bumpy, towards disinflation on both sides of the Atlantic.

“The eurozone recovery is promising, although the pace of expansion will remain uneven and growth will struggle to exceed its potential. Political risks from the French elections raise new doubts about fiscal consolidation in the eurozone, but they are unlikely to derail moderate growth,” GENERALI INVESTMENTS analysts said.

According to Eurostat, in the sense of retail prices, inflation in the eurozone did indeed slow in June, settling at 2.5% over a year against 2.6% in May. But “core” inflation, excluding food and energy prices (and alcohol and tobacco) rose by 2.9%, more than the 2.8% anticipated by economists surveyed by Reuters. And this while the most influential central bankers in the world are meeting at the annual Forum organized by the European Central Bank in Sintra, Portugal.

According to Deutsche Bank, Christine Lagarde said the ECB still faces several uncertainties in its fight against inflation, including the evolution of wages, productivity and profits. The ECB president also added that the institution would need time to gather enough data to be sure that the risks of inflation above its target have been averted.

Second focus of the week, the ability of the American economy to land smoothly. A working hypothesis further supported yesterday by the ISM manufacturing, which came out below expectations at 48.50. Employment, which is the statistical thread of the week, will further validate, or not, the quality of the landing. New job openings (JOLTS) exceeded expectations, and investors will take note of the ADP survey this Wednesday, before weekly jobless claims on Thursday and the NFP report on Friday.

To follow the ISM Services activity barometer at 4:00 p.m., expected to contract slightly to 52.6, still well above the 50 point mark which, by construction, separates an expansion from a contraction in the sector considered.

At midday on the foreign exchange market, the Euro was trading against $1,0755 approximately.

KEY GRAPHIC ELEMENTS

In a strong volatility, the Euro / Dollar currency pair has regained the upper part of a bearish oblique line, constituting a short-term oxygen supply. The technical signals are contradictory in the immediate future and do not allow a serene position-taking. In any case, we are suspending our sell lines.

MEDIUM TERM FORECAST

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

We will maintain this neutral opinion as long as the Euro Dollar (EURUSD) parity rates are positioned between the support at 1.0664 USD and the resistance at 1.0758 USD.

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