EUR/USD: Waiting for US PCE

KEY GRAPHIC ELEMENTS

The US economy grew at a slightly faster pace in the second quarter than initially reported. Gross domestic product grew at an annualized rate of 3% in the April-June period, compared to a previous estimate of 2.8%. This information strengthens the dollar as the US economy appears stronger than investors expected. In addition, other data this week, such as inflation in Spain, also favored the dollar as this indicator came out below expectations and therefore favors a more dovish, i.e. more accommodative, ECB. The publication of the inflation index for the eurozone is expected today at 11:00. This afternoon, traders will have to welcome many data, including the PCE inflation index, consumer confidence and a PMI activity indicator from Chicago. Investors are currently positioned with the guideline of obtaining a rate cut from the Fed in September and expect 3 to 4 rate cuts in total in 2024. These statistics will therefore reinforce or endanger these assumptions: strong volatility is to be expected.

Technical Section: The European currency remains neutral in the short term and bullish in the medium term. We will therefore seek to position ourselves in the direction of the trend to buy in order to target the next resistance at 1.1250. As a reminder, the optimal entry to join the trend is to enter a long position in contact with the 20-period daily moving average which has served as dynamic support until now.

MEDIUM TERM FORECAST

Considering the key graphic factors that we have mentioned, our opinion is neutral in the medium term on the Euro Dollar (EURUSD) parity.

We will maintain this neutral opinion as long as the Euro Dollar (EURUSD) parity rates are positioned between the support at 1.1069 USD and the resistance at 1.1134 USD.

DAILY DATA CHART