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Market psychology remained unchanged on the flagship currency pair: the chronic decline of the EURUSD continues to be explained by an anticipated increase in the remuneration differential between the two currencies, the Fed being in some way “forced” to be patient , unlike its European counterpart. The latest report on American employment, of excellent quality, has further supported this basis of work.

As a reminder, the unemployment rate, expected to be stable at 4.2% of the active population, has the luxury of falling to 4.1%, very close to full employment. Job creation in the private sector (excluding agriculture), expected at 164,000, came to 256,000, very well above the target. Finally, and this is the positive point to remember, the moderation of the increase in wages, of +0.3%, in line with analysts’ expectations. The 10-year Treasuries, the yield on US Treasury bonds maturing in 10 years, immediately heated up to close to 4.80%…

“Current figures indicate that there will probably be no further interest rate cuts in January, while markets now only expect further cuts in the second half of the year. It remains to be seen whether the Continued robustness in labor demand is due to post-election euphoria. But if this robustness continues, it certainly argues in favor of the US Federal Reserve keeping interest rates at a level. higher even a little longer than this which was planned a few months ago”, for Christian Scherrmann, American Economist DWS.

“Be careful, however, not to focus on a single report on employment as recalled by Austan Goolsbee, the president of the Chicago Fed, the revisions for more than a year being quite systematically oriented downwards,” said keen to put Thomas Giudici, head of bond management at Auris Gestion, into perspective.

Other major meetings on producer prices, retail prices and consumption are awaited with interest this week, because they constitute, combined with each other, essential elements of reflection for the Federal Reserve in the construction of its monetary policy.

César Perez Ruiz, Head of Investments and CIO at Pictet Wealth Management summarizes: “Before his inauguration on January 20 [celle de Donald Trump, ndlr]we will monitor the CPI this week [indice des prix à la consommation] and retail sales in the United States, where recent signs of overheating in the job market will prompt the Fed to take a break in January. For its part, the ECB is expected to lower its rates at each of its meetings until July 2025, while the SNB could ease its policy by 25bp in March and June.”

On the macroeconomic agenda this Tuesday, priority will be given to producer prices in the United States at 2:30 p.m. This leading inflation indicator will be followed tomorrow by consumer prices, the statistical highlight of the week. The impact of these statistics could be significant on the bond market, and consequently on foreign exchange.

At midday on the foreign exchange market, the Euro was trading against $1.0260 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 $1.0259. The price target for our bearish scenario is $1.0001. To preserve the invested capital, we advise you to position a protective stop at $1.0361.

The expected profitability of this Forex strategy is 258 pips and the risk of loss is 102 pips.

News Bulletin 247 advice

EUR/USD
Negative to €1.0259
Objective :
1.0001 (258 pips)
Stop:
1.0361 (102 pips)
Resistance(s):
1.0340 / 1.0448 / 1.0608
Support(s):
1.0238 / 1.0100 / 1.0000

DAILY DATA CHART