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The Euro/Dollar currency pair declined somewhat against the Dollar, after the moderately accommodating tone adopted by Christine Lagarde, at the press conference closing the Governing Council of the European Central Bank (ECB), yesterday. The meeting ended, unsurprisingly, with a status quo on the key rates themselves, with a review clause at the start of the school year.
The ECB had initiated, following in the footsteps of the Fed, the rate cut at the beginning of June. For the time being, the Euro rent is on hold.
“The ECB had suggested that this July meeting would not lead to a change in its monetary policy but that it would above all allow it to assess the effects of the first rate cut and to verify that the economic forecasts updated in June were confirmed,” recalls Jean-Patrice Prudhomme, Director of Products & Solutions at Milleis Banque Privée.
Ms Lagarde “stressed that inflation is likely to continue to fluctuate around current levels in 2024 while the pace of wage growth remains high and growth is expected to be weaker in the second quarter than in the first. She said the ECB will decide on a meeting-by-meeting basis based on inflation and growth data. The many indicators published before the next meeting in September still have the potential to change economic projections.”
In terms of statistics, across the Atlantic, housing starts and building permits, as well as monthly industrial production and the rate of utilization of productive capacities, have exceeded expectations. The target was exceeded even more, and by far this Thursday on the Philly Fed index (manufacturing index of the Philadelphia Fed), which jumped to 13.9 points, its second best score since April 2022. On the other hand, weekly unemployment benefit registrations missed the target, coming out close to 240,000 new units. A figure which nevertheless reinforces the idea of ​​a more flexible monetary policy from the start of the school year.
On the agenda this Friday, to follow as a priority a speech by Mr Williams (Fed of NY) on the occasion of an event in Peru, the 15th Bretton Woods conference, on the theme: “A new era for monetary policy”. A question and answer session is scheduled.
At midday on the foreign exchange market, the Euro was trading against $1,0885 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 / $1.0900. It is clear that the currency pair is stalling.
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 1.0885 USD. The price target of our bearish scenario is at 1.0759 USD. To preserve the capital invested, we advise you to position a protective stop at 1.0951 USD.
The expected return on this Forex strategy is 126 pips and the risk of loss is 65.999999999999 pips.
The News Bulletin 247 council
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