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Against a backdrop of increased caution regarding risky assets, the Euro/Dollar currency pair continued its downward movement, below a graphical resistance zone. Yesterday, the preliminary data from the PMI activity barometers in the Eurozone disappointed.
In the very first estimates for the current month, the industrial and services PMIs in the Eurozone, at 45.6 and 51.9 respectively, missed expectations. It is especially the German industrial component, at 42.6, which is of concern.
“While Germany is struggling to return to growth, the French economy is benefiting from the economic fallout from the Olympic Games. The companies surveyed indicated that they had taken advantage of the business opportunities offered by the hosting of the 2024 Olympic Games in Paris. Overall activity in the German private sector, however, suffered from the poor performance of the manufacturing sector, which survey respondents attributed to a weakening in demand,” commented Dr. Cyrus de la Rubia, Chief Economist at Hamburg Commercial Bank.
On the agenda this Thursday, to follow as a priority the very first estimates of the American quarterly GDP and the weekly registrations for unemployment benefits across the Atlantic at 2:30 p.m., and a speech by Mrs. Lagarde, President of the BCE at 5:00 p.m., on the occasion of a “Sport and Sustainable Development” summit, in Paris, on the eve of the opening ceremony of the Olympic Games.
The statistical high point of the week will be reached tomorrow with the publication of the index at 2:30 p.m. core PCE (personal consumption expenditure) prices, THE Fed’s preferred measure in its assessment of inflation. Currency traders will have material to further confirm, or not, the hypothesis of two federal rate cuts by the end of the year. In any case, a first cut at the start of the school year is notified with a probability of… 100%, according to data from the CME Group’s FedWatxh tool.
At midday on the foreign exchange market, the Euro was trading against $1,0840 approximately.
KEY GRAPHIC ELEMENTS
After failing against a graphical resistance level around $1.0910, the EURUSD spot has retreated, now finding itself on a congestion zone of two notable moving averages, at 20 and 50 days.
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 1.0847 USD. The price target of our bearish scenario is at 1.0665 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 182 pips and the risk of loss is 60 pips.
The News Bulletin 247 council
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