(News Bulletin 247) – While the fragile floor of $ 1.1530 per euro gave way at the heart of the week, under the effect of the publication of an acceleration in US inflation, new bearish targets are locked ( see below in technical part). A reminder on the latest inflationary figures is in order.
These various consumer price indices will make it possible to gauge the degree of price warming, and therefore refine the estimated schedule for raising federal rates. And this although the Fed prefers PCEs (Personal Consumption Expenditure) as a measure of retail prices.
In the end and in detail, over the month of October, and on a monthly basis, consumer prices rose by 0.9%, against 0.6% expected. Excluding food and energy (elements considered the most volatile), prices gained 0.9%, against 0.6% expected according to the latest figures from the Bureau of Labor Statistics. On an annualized basis, headline inflation (the broadest base) stands at 6.2% …
“This inflation report is sure to revive the debate on the timing of the Fed’s rate hikes, with bond markets expecting a first hike in July and a second by year-end. , with a firming of the probabilities of rate hikes following this report. “, for Vincent Manuel, Director of Investments at Indosuez Wealth Management.
It is indeed this increase in the probabilities of a first turn of the screw by direct action on rates from July, which has further fueled the appetite for the dollar, whose potential for “remuneration” is there. improved, compared to the Euro. “The European economy is holding up better than the American, Japanese and Chinese economies. European plans are gradually being put in place and will encourage growth. The inflationary risk remains minor in the region and the ECB will remain very accommodating”, explains Frédéric Rollin, adviser in investment strategy at Pictet AM.
In the immediate future, the decline of the Euro is somewhat slowed down by a statistic less alarming than expected on the dynamics of industrial production in the countries of the monetary union (-0.2% monthly in September) .
To be continued statistically this afternoon: the new job offers (JOLTS) at 4:00 p.m., and the consumer confidence index (U-Mich) in preliminary data, also at 4:00 p.m.
KEY GRAPHIC ELEMENTS
We clarified the following on Wednesday, as a reminder: “A break in a fragile support zone at 1.1530 would increase volatility. The working band between $ 1.1530 and $ 1.1675 would then be obsolete.” This zone gave way, with validation by volatility. The current seller is thereby strengthened. Next bearish target locked at $ 1.1150. And this without excluding the possibility of a pullback over the $ 1.1530.
MEDIUM-TERM FORECAST
In view of the key graphical factors that we have mentioned, our opinion is negative in the medium term on the pair Euro Dollar (EURUSD).
Our entry point is at 1.1445 USD. The price target for our bearish scenario is at 1.1151 USD. To preserve the committed capital, we advise you to position a protective stop at 1.1531 USD.
The expected return on this Forex strategy is 294 pips and the risk of loss is 86 pips.
DAILY DATA CHART
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Source: Tradingsat
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