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After a battery of very contrasting PMI indicators yesterday, on both sides of the Atlantic, currency traders are looking this morning at the closely followed confidence index in the German economy, the first in the Euro Zone although losing speed. The famous “IFO” came out at 86.5, very slightly above the target. The results of the survey show in particular a chronic underutilization of production capacities, and a continuation at the heart of the “Crisis” box of the economic cycle matrix tool.

Yesterday the German industrial PMI, under the microscope of investors, came out in preliminary data for the current month at 51.4, against a target of 50.6. It is therefore leaving its contraction zone, to a slightly greater extent than anticipated, but without sweeping aside the recurring concerns about the German industrial model, which has shown its limits in inflationary periods.

Across the Atlantic yesterday, new weekly registrations for unemployment benefits were published, down to 227,000, where the consensus predicted a stabilization around 245,000. A new illustration of the resilience of the American economy, through chronic tensions on the employment front, after so many months of high rates. To follow orders for durable goods at 2:30 p.m.

The markets remain focused on the major event which structures political life across the Atlantic: the elections of (or the!) President, in two weeks. The latest polls show an extremely close duel between former President Trump and J Biden’s current Vice President, K Harris.

“In this long-awaited presidential election, Donald Trump promises tax cuts for businesses and individuals, but intends to impose customs duties on foreign companies, in addition to carrying out mass deportations of immigrants and an overhaul ministries”, note Robeco strategists.

“Kamala Harris targets the middle class and invests in housing and health care development while increasing taxes on corporations and the very wealthy. Both candidates’ agenda is likely to widen the already growing budget deficit.

That being said, fiscal responsibility is far from the top of the list for voters, as the economy tends to be the dominant issue in the poll, says Mike Mullaney, director of global markets research at Boston Partners, Robeco’s sister entity focused on fundamental value investing.”

At midday on the foreign exchange market, the Euro was trading against $1.0830 approximately.

KEY GRAPHIC ELEMENTS

The oblique support line (drawn in black) has given way in a significant and increasing level of volatility. The 50-day moving average (in orange) also gave way quickly, the bearish message is reinforced. Next graphic event to watch, the ongoing crossing of two remarkable moving averages, at 20 and 50 days. The crossing angle is important, in light of the current correction.

MEDIUM TERM FORECAST

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

Our entry point is at 1.0826 USD. The price target for our bearish scenario is at 1.0551 USD. To preserve the invested capital, we advise you to position a protective stop at 1.0907 USD.

The expected profitability of this Forex strategy is 275 pips and the risk of loss is 81 pips.

News Bulletin 247 advice

EUR/USD
Negative to €1.0826
Objective :
1.0551 (275 pips)
Stop:
1.0907 (81 pips)
Resistance(s):
1.0906 / 1.1012 / 1.1136
Support(s):
1.0758 / 1.0664 / 1.0598

DAILY DATA CHART