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The single currency continued to suffer, against the Dollar, from the dichotomy of monetary policies on both sides of the Atlantic, since the Fed adopted a much firmer tone at the end of last year, forcing it to be patient in its process of lowering rates, in the face of the accumulation of excellent macroeconomic news. The latest employment report (NFP published at the end of last week) confirmed this working basis.
In the immediate future, the currency pair is attempting a very slight technical reaction, towards a dynamic resistance zone, namely the 20-day moving average (in dark blue).
It is in this context that currency traders will learn about consumer prices across the Atlantic (CPI), one of the flagship measures of inflation, and therefore an essential working basis for the Fed in the construction of its monetary policy. . Prices are expected to increase by 2.9% year-on-year, compared to 2.7% last month, for the broadest basket of products.
Currency traders will also continue to follow Trump’s customs announcements, a few days before his official inauguration. On Monday evening, the Bloomberg news agency reported that the Trump administration was considering phasing in tariff surcharges of 2% to 5% per month, rather than implementing them all at once. This process would make it possible to avoid a peak in inflation and would give negotiating power to the United States, according to close sources cited by the agency. Bloomberg specifies that this project is only in the preliminary stages and that it has not been presented to Donald Trump.
In the immediate future, currency traders have just become aware of a lower-than-expected monthly increase in industrial production in the Euro Zone (+0.2% versus +0.3% expected) for the month of November. We will also follow at 2:30 p.m., in addition to the American CPI, the manufacturing index Empire State.
At midday on the foreign exchange market, the Euro was trading against $1.0310 approximately.
KEY GRAPHIC ELEMENTS
The reaction movement carried out at the beginning of the month, encouraged by press reports denied by D Trump, is already running out of steam.
This surge is not likely to counter the underlying bearish bias, but sends a legitimate message of protest. The 50-day moving average (in orange) continues to constitute a solid technical and graphical barrier.
Once perfect parity is reached, namely 1$ for 1€, a vigorous buyer reaction of protest could be put in place.
MEDIUM TERM FORECAST
Considering the key graphical factors that we have mentioned, our opinion is negative in the medium term on the EURUSD parity.
Our entry point is at $1.0305. The price target for our bearish scenario is $1.0001. To preserve the invested capital, we advise you to position a protective stop at $1.0421.
The expected profitability of this Forex strategy is 304 pips and the risk of loss is 116 pips.
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