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Against a backdrop of shrinking risk appetite on financial markets, the Euro suffered from a short-term downward trend against the Dollar, while the statistical calendar is clearly getting denser this Tuesday, after the desert crossed yesterday. Three American figures of major importance are particularly expected this afternoon: the American consumer confidence index (Conference Board), new job offers, and S&P CS real estate prices.
On this side of the Atlantic, currency traders took note of the growth in GDP in the Eurozone, at +0.3% in Q2, helped by the French component which exceeded expectations.
On Wednesday, the ADP survey from private human resources firm will provide a gauge of the health of U.S. private employment, before the release of the monthly NFP (Non Farm Payrolls) report on Friday. Meanwhile, traders will focus on weekly jobless claims and the ISM manufacturing PMI on Thursday.
The opportunity to more precisely measure the “normalization” of the major economies of the planet, and the capacity, especially in the United States, to see economic activity land gently. One scenario is currently holding the rope: that of two reductions in federal rates this year, with one almost certainly at the start of the school year.
The risk appetite, which influences the Euro against the safe haven Dollar, may be affected by the Chinese banking sector. As Christopher Dembik, investment strategy advisor at Pictet AM, compiles, “The situation in China is causing cold sweats for investors around the world. This time, it is the banking sector that is the main focus. In one week, 40 banks have disappeared. The country is facing a silent banking crisis. Nearly 3,800 small local banks – mainly located in rural areas – are in difficulty. This is the equivalent of 13% of the Chinese banking system.”
The decline in oil prices is also keeping some pressure on the single currency, with a barrel of light Texas crude contracting to around $75.
At midday on the foreign exchange market, the Euro was trading against $1,0830 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. Negative opinion maintained.
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 1.0834 USD. The price target of our bearish scenario is at 1.0601 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 233 pips and the risk of loss is 73 pips.
The News Bulletin 247 council
DAILY DATA CHART
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