(News Bulletin 247) – In perfect synchronization with the CAC and the DAX, the Euro reacted on Wednesday to protest against the safe haven Dollar, drawing a pullback (chart rejection) towards a key zone ($1.10 ), as Biden announces an embargo on the import of natural gas and Russian oil into the United States, and on the eve of the outcome of a new Board of Governors of the European Central Bank (ECB).
If on the side of the Fed the equation is probably less complex, it is the question of the angle of the monetary turn to come that arises. While a 50 bp increase in Fed Funds was almost unanimous not long ago, an increase of only 25 bp is the scenario now clearly envisaged, by J. Powell himself in a half-yearly hearing before the Parliamentarians. First elements of response on March 16 at the end of the FOMC (Monetary Policy Committee).
“For the ECB, which is holding its monetary policy meeting this week, the situation is more complex”, according to T. GIUDICI, “because the zone is more directly impacted by the Russian-Ukrainian situation. If the insinuations (and the non- said) by Christine Lagarde in February were campaigning for a more hawkish ECB, she could finally catch up with the branches of the December decisions which provided for an increase in the APP (to compensate for the PEPP) until the end of the year before a possible first rate hike in 2023.” First elements of response this Thursday at the end of the Board of Governors.
To follow in priority, on the agenda this Wednesday, in the United States new job offers (JOLTS) at 4:00 p.m. and crude stocks at 4:30 p.m. Let us note for yesterday the encouraging figures for the dynamics of German industrial production (+2.7% in January on a monthly basis), very largely beyond expectations. In addition, the NFIB index of small American companies, published at 12:00 (Paris time) disappointed by contracting to 95.7 points.
At midday on the foreign exchange market, the Euro was trading against $1.0980 about.
KEY GRAPHIC ELEMENTS
The transition phase between February 4 and 23, in the form of a slip without federation, under the 100-day moving average (in orange) is over. The underlying bearish bias aligns with the short term, and the plot of a candle conspicuous by its red body on Thursday 2/24 illustrates the firm grip of the selling side. With 6 red bodied candles over the last 6 candles, the last one still being drawn, and continued selling mobilization over the past week, the picture remains gloomy. We are reviewing our bearish targets, at $1.0685, then if necessary at $1.0454. In the immediate term, and in the absence of an interesting entry point, traders will avoid taking an immediate position.
MEDIUM TERM FORECAST
In view of the key graphic factors that we have mentioned, our opinion is neutral in the medium term on the Euro Dollar (EURUSD).
We will keep this neutral opinion as long as the Euro Dollar (EURUSD) parity prices are positioned between the support at 1.0685 USD and the resistance at 1.1000 USD.
CHART IN DAILY DATA
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