EUR/USD: The Euro, an accurate thermometer of risk appetite

(News Bulletin 247) – This article, freely accessible, is produced by the News Bulletin 247 stock market analysis and strategy research team. To not miss any opportunity, consult the full analyses and discover our portfolios by accessing our Privileges area.

In a climate not conducive to short-term risk appetite, the Euro balanced against the Dollar, around $1.1050 per Euro, while fears about the American economy have not yet completely faded. The ISM manufacturing index, in any case, came out very close to expectations yesterday, at 47.2. However, it is no less disappointing.

This bad statistic has revived fears about American and therefore global growth, triggering violent corrections in the sectors that have shown the best performances since the beginning of the year, such as technology. NVidia thus melted by almost 10% yesterday.

Employment across the Atlantic will be particularly closely monitored at the end of the week, with the statistical highlight being the NFP (Non Farm Payrolls) report on the health of private employment outside agriculture. Currency traders will have valuable previews tomorrow with the ADP survey and weekly unemployment benefit registrations, and starting this Wednesday with new job offers (JOLTS).

Currency traders took note of the final Eurozone PMI data for industry in August on Monday morning. Figures with no significant deviation from the consensus, which confirms the concern surrounding 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, both stocks and commodities. For example, the barrel of light Texas crude (WTI) fell below the $70 mark.

This morning, it was the turn of the services PMIs, in final data for the month of August, which were displayed without significant deviation from the target, at 45.8 in synthetic data for the entire monetary union.

At midday on the foreign exchange market, the Euro was trading against $1,1060 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