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The Euro was already back at unprecedented levels against the Dollar since June 7, following particularly encouraging figures published yesterday on American inflation. The potential for “remuneration” of the greenback compared to the single currency is mechanically reduced.
Prices, excluding food and energy, rose by 0.1% against a target of +0.2%. In the broadest basket of products, the most even fell back… This is a first monthly rate since 2020.
Enough to cause a clear easing on Treasury bonds which, for the 10-year maturity, are flirting with 4.20. The probability of a cut in federal rates in September jumps to 92.5% according to the CME Group’s FedWatch tool.
“This inflation report constitutes a second consecutive positive surprise. The ‘housing’ component reassures for the continuation of the disinflation path. This, coupled with the more worrying signals on the labor market, should push the Fed to specify its schedule for reductions in key rates,” adds Bastien Drut, head of strategy and economic studies.
It is clear: the Fed will proceed, barring a huge surprise, to an initial loosening of the monetary tap by direct action on rates at the end of the FOMC on September 18 and 19.
On European monetary policy, Nomura strategists expect that “the European Central Bank’s decision on July 18 should go smoothly.” [avec un statu quo surles taux]And [s’attendent] that the guidelines are consistent with those of Sintra. The questions and answers should focus on the possibility of a further reduction in September or on the persistence of concerns about the maintenance of inflation in services.”
On the agenda this Friday, to be followed as a priority across the Atlantic, are producer prices at 2:30 p.m. and the consumer confidence index (U-Mich) at 4:00 p.m., in preliminary data.
At midday on the foreign exchange market, the Euro was trading against $1,0890 approximately.
KEY GRAPHIC ELEMENTS
In a strong volatility in week 27, the Euro / Dollar currency pair 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. We are currently witnessing a test of a resistance level located at $1.0885.
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 1.0758 USD and the resistance at 1.0890 USD.
The News Bulletin 247 council
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