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The Euro/Dollar remained under strong pressure, against a backdrop of tensions on the American 10-year bond while the American economy showed insolent resilience. Tensions were rekindled last week by Powell, Chairman of the Fed, during an event organized at the federal branch of the Federal Reserve in Dallas. Based on the very good health of the American economy, he explained that a rapid rate cut was not justified, and that there was no urgency in the ongoing monetary easing process. A tone considered less dovish, if not more hawkish than expected. In the process, and according to the CME Group’s FedWatch tool, the probability of a monetary status quo at the end of the next FOMC jumped to 37.4%. The American 10-year, for its part, continues to simmer in the immediate vicinity of 4.43%.
“If the President of the Fed still considers that the American economy is “remarkably good” with a still resilient labor market, he is however now more measured on the inflationary risk while the American institution is not, officially, taking not yet taking into account the result of the election, Jerome Powell therefore considers that the Fed will have to maintain a gradual and cautious approach in the coming weeks”, argued Thomas GIUDICI, Head of bond management at Auris Gestion.
Forex traders are gradually losing their appetite for risk as Trump reveals his upcoming appointments. “We will thus note the future appointments of (i) Matt Gaetz to justice, under the influence of an ethics report from the House of Representatives for various alleged sexual offenses and embezzlement, of (ii) Robert Kennedy Jr , anti-vax conspirator, as health secretary, dragging the entire pharmaceutical sector into the red, from (iii) Brendan Carr at the head of the telecoms regulator and quite fiercely opposed to GAFAM which he considers a censorship cartel to be dismantled or, for example, (iv) Chris Wright as Secretary of Energy and founder of a company specializing in hydraulic fracturing and shale oil.
On the statistical side this morning, for the Euro Zone, the final consumer price data, in final data for the month of October, excluding food, energy, alcohol and tobacco, came out at +2.7% on an annual basis, consistent with initial estimates. To follow the housing starts and building permits across the Atlantic, at 2:30 p.m.
At midday on the foreign exchange market, the Euro was trading against $1.0570 approximately.
KEY GRAPHIC ELEMENTS
The currency pair has just come out from the bottom, in intense volatilityof a wedge pattern, which confirms the bearish bias, which is now fundamental. Since then, the fragile supports have broken one after the other. Negative review maintained.
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 1.0565 USD. The price target for our bearish scenario is at 1.0151 USD. To preserve the invested capital, we advise you to position a protective stop at 1.0701 USD.
The expected profitability of this Forex strategy is 414 pips and the risk of loss is 136 pips.
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