EUR/USD: The macro agenda is gradually becoming denser

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Deprived of major statistical benchmarks since last Thursday, the EURUSD spot continued to consolidate around $1.0870 for one €, with traders easily digesting the latest Governing Council, which will ultimately only have confirmed the very great dependence on Christine Lagarde’s data.

Ms. “Lagarde reiterated that nothing was certain for the September meeting, with the ECB remaining “data dependent”. However, the governors seem increasingly confident that the price index will return to its 2% target, especially since wage pressures (one of the only areas of focus in the eurozone) are leading companies to reduce their margins rather than increase their prices again, given that domestic demand remains modest,” comments Thomas Giudici, head of bond management at Auris Gestion.

If yesterday was a desert on the macroeconomic side, traders will be able to sink their teeth into the sales of existing homes and the Richmond Fed manufacturing index this afternoon. But the agenda will really get denser later in the week, with in particular, the preliminary data of the PMI leading indicators tomorrow, durable goods orders and the very first estimates of the US quarterly GDP and above all, Friday as a highlight, the core PCE price index, i.e. the reference baometer in the sense of the Fed, for the assessment of inflation.

Currency traders are keeping a close eye on the US presidential campaign, as Joe Biden’s decision not to run again could reshuffle the cards. If D Trump remains the favourite, he will have to adapt his strategy in any case.

“This reversal of the situation could allow the Democrats to regain some momentum. One thing is certain, however, the Republican candidate will be forced to change his tune, since his main angle of attack until now has focused essentially on the age and physical and mental capacity of Joe Biden.”

At midday on the foreign exchange market, the Euro was trading at around $1.0870.

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 now 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 1.0863 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 1.0907 USD.

The expected return on this Forex strategy is 104 pips and the risk of loss is 44 pips.

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