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In a very “academic” way, the Euro/Dollar currency pair was completing a triangle consolidation phase, a phase which immediately followed the surge in prices on August 2, while a federal report on American employment froze the mood on the markets.
“Beyond the subject of central banks, whether it be the Bank of Japan or the Fed, which have clearly contributed to this resurgence of nervousness, it is the theme of the potential slowdown in the American economy that has soared in recent weeks. Firstly in relation to the trend observed in macroeconomic publications, and then on the cautious, even fearful, speech of Jerome Powell during the last Fed press conference”, deciphers Alexandre Baradez, head of market analysis at IG France, who sees a weak signal in the Baltic Dry Index.
“While the Baltic Dry Index had been following a trend line since January, it broke this momentum as stress emerged on global markets.”
“The Baltic Dry Index is a price index for dry bulk shipping, necessarily defined by supply and demand. The progression of this index was rather lateral since the beginning of the year but the intermediate low points on this index were relatively well aligned, thus following a sort of upward “trend line.”
This Monday, no major figures are on the agenda. The agenda will get denser next week with producer prices on Tuesday, consumer prices on Wednesday, retail sales on Thursday, and consumer confidence (U-Mich) on Friday. All important indicators, to be closely monitored, on the health of the world’s leading economy.
The CME Group’s FedWatch tool now puts the respective probabilities of a 25 or 50 basis point cut in the Fed Funds rate at the end of the Fed’s next monetary policy meeting on September 18th. As a reminder, the valuable tool allows you to analyze the probabilities of changes in federal rates and US monetary policy based on the price of 30-day federal funds futures contracts.
At midday on the foreign exchange market, the Euro was trading against $1.0925 approximately.
KEY GRAPHIC ELEMENTS
Approximately in the shape of a pennant, the consolidation that took shape on the Euro / Dollar currency pair is ending, in decreasing volatility. The violence of the initial rise invites us to take the measure of an additional bullish potential/
MEDIUM TERM FORECAST
Considering the key graphic factors that we have mentioned, our opinion is positive in the medium term on the Euro Dollar parity (EURUSD).
Our entry point is at 1.0926 USD. The price target of our bullish scenario is at 1.1143 USD. To preserve the capital invested, we advise you to position a protective stop at 1.0834 USD.
The expected return on this Forex strategy is 217 pips and the risk of loss is 92 pips.
The News Bulletin 247 council
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