EUR/USD: Preliminary ADP and GDP survey on the menu

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The short-term bias of the Euro, against the Dollar, remained strongly bearish, while the American 10-year was at its highest since July 9, after a series of statistics showing impressive resilience of the American economy, after long months of high rates. The latest indicator to date, the consumer confidence index (Conference Board), published yesterday, which exploded the target by rocketing to 108.7 points.

Employment also continues to show chronic signs of tension, and currency traders will be able to measure this at the end of the week with the federal report on private employment outside agriculture, the closely followed NFP report (for Non Farm Payrolls). In the meantime, they will have a taste this Wednesday at 1:15 p.m. with the publication of the investigation by the private firm ADP.

Currency traders are keeping a close eye on the final stretch before the outcome of the American presidential election, while chatter is flying between the candidates, through meetings.

“As in the last elections, this could be decided by a few votes and the results could not be known the same day, each state having, moreover, its own electoral rules (and contesting the results)”, comments Thomas Giudici , head of bond management at Auris Gestion, who has the humility not to play the oracles: “It is therefore quite complicated to position the portfolios in one direction or the other as the result of the election is more of the casino than of political or financial analysis”.

Note also that the very first estimates of American Q3 GDP will be published at 1:30 p.m., expected to increase by 3% on an annual basis.

At midday on the foreign exchange market, the Euro was trading against $1.0840 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 1.0840 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 1.0937 USD.

The expected profitability of this Forex strategy is 289 pips and the risk of loss is 97 pips.

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