EUR/USD: Pullback on $1.0550

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The EURUSD currency pair may well develop a pullback towards $1.0550, the bias remained clearly bearish, against a backdrop of increasing economic imbalance between the two shores of the Atlantic.

“The euro zone is more than ever penalized by its two (former) locomotives stuck, what’s more, in political blockages. While we still wonder how France will succeed in bringing its public finances back on the right path (without , we hope, impact growth too much), Germany, for its part, must completely review its economic model in place since the 90s and reunification: exports to China, cheap Russian oil and gas and of American protectionism. three, there are none left,” coldly notes Thomas Giuduci, head of bond management at Auris Gestion.

While on the contrary, “everything seems to be going well across the Atlantic: producer prices are slowing down, tensions on the labor market are decreasing and, above all, business leaders’ forecasts are reaching two-year highs.” and a half thanks in particular to the pro-business policy desired by the new American administration.

The macroeconomic calendar is expanding somewhat with, at 4:00 p.m., the closely followed American consumer confidence index (Conference Board) and at 8:00 p.m. the Fed Minutes, a valuable meeting for currency traders, who are looking for clues on the intentions of the powerful national bank in terms of monetary policy. Yesterday Monday, the morale of German entrepreneurs fell more than expected in November, to 85.7 points, according to the IFO barometer published this Monday. The market consensus anticipated a less pronounced deterioration, at 86 points compared to 86.5 points in October.

“The strong dollar should remain the norm in 2025,” predicts Christopher Dembik, investment strategy advisor at Pictet AM. “International investors are now only betting on the American economy. Consequence: inflows into the American market are reaching record levels, which structurally supports the rise in American stocks and the greenback. For example, over the week going From November 5 to 13, US ETFs and mutual funds attracted $56 billion. This is the second largest weekly inflow since 2008. It’s just incredible.

At midday on the foreign exchange market, the Euro was trading against $1.0510 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. However, at this stage the decline and the formation of a technical rebound cannot be long in coming, we are watching for the signs.

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 1.0509 USD. The price target for our bearish scenario is at 1.0101 USD. To preserve the capital invested, we advise you to position a protective stop at 1.0636 USD.

The expected profitability of this Forex strategy is 408 pips and the risk of loss is 127 pips.

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