EUR/USD: Breathing

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The Euro/Dollar currency pair continued its consolidation movement, close to its 20-day moving average (in dark blue), while traders await guidance from Wall Street, which remained closed on Monday due to a public holiday (Labor Day).

Currency traders took note yesterday morning of the final PMI data for the Eurozone industry in August. Figures without significant deviations from the consensus, which confirms the concern around German industry (42.4 points). Let us recall that below 50, the PMI score reflects a contraction.

“Germany is today the black spot of the European continent due to its very industrial positioning,” notes Emmanuel Auboyneau, AMPLEGEST Associate Manager.

“The rebound in tourism is benefiting countries like France, Spain and Italy more. European inflation has remained moderate throughout the summer and is now approaching the European Central Bank’s target. The recent wage moderation is reassuring in this respect. Everything therefore indicates that the European monetary institution will continue its rate cut cycle that began in July.”

Disappointing activity barometers, this time in China, weigh on all risky asset classes, stocks as well as raw materials or the Euro. It is in this context that the American ISM manufacturing index will be published at 4:00 p.m. This barometer is expected to rise slightly to 47.5 points.

A figure that should support, barring a significant deviation from the target, the idea of ​​an imminent first federal rate cut, even if “the Fed is the last central bank in developed countries (excluding Japan, of course) to have still not started its cycle of lowering key rates while inflation has largely declined since its highs in 2022”, as noted by Thomas Giudici, head of bond management at Auris Gestion.

“Unlike other areas, the strength of the US economy partly explains this caution in acting by FOMC members. This strength was once again confirmed last week by the upward revision of GDP and consumption data for the second quarter as well as by the above-expectations figures for US household income and spending for the month of July.”

The Fed will also be paying close attention to the content of the private employment survey for August, which will be released on Friday as the statistical highlight of the week. 164,000 jobs are expected to be created in the private sector (excluding agriculture), after a very disappointing performance of 114,000 the previous month.

At midday on the foreign exchange market, the Euro was trading against $1,1040 approximately.

KEY GRAPHIC ELEMENTS

In contact with its 20-day moving average (in dark blue), the EURUSD spot is completing a breathing phase, within an upward trend which is measured by the growing gap between the aforementioned moving average and its 50-day counterpart (in orange).

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 1.1012 USD and the resistance at 1.1134 USD.

DAILY DATA CHART