EUR/USD: German industrial PMI less worse than expected

(News Bulletin 247) – This article, with open access, is produced by the stock market analysis and strategy research team at News Bulletin 247. To ensure you don’t miss any opportunities, consult all the analyzes and discover our portfolios by accessing our Privileges area.

With meetings of the major central banks on both sides of the Atlantic looming at the end of the month, the Euro regained, in a movement of protest, a few pips against the Dollar.

The Fed will be the first to complete its Monetary Policy Committee on January 29. “The Fed will remain on hold at the FOMC meeting in January, although recent data may suggest a slightly less restrictive posture than in December. The latest inflation statistics keep open the possibility of further rate cuts, even if they would be limited, and the job market – despite a strong hiring dynamic – does not currently constitute a source of inflationary pressure. However, uncertainty around economic policies remains present,” anticipates Christian Scherrmann, economist. head for the United States of DWS.

The ECB will follow suit the next day with the end of its Board of Governors, the European equivalent of the FOMC. The “context [économique] allows the ECB to further reduce the deposit rate by 25 basis points, to 2.75%”, for Ulrike Kastens, European Economist of the same management house, which is based on the dichotomy with the health of the economy “Since the last ECB meeting in December, the data situation in the euro zone has not changed much. Economic indicators continue to point to rather weak growth in the coming months. As expected, the inflation rate continued to rise through the end of 2024. However, inflation projections also show increased confidence that cost of living increases will sustainably move closer to the target. ‘inflation.”

Note that the macroeconomic agenda is finally becoming more dense – it’s about time! – this week, with yesterday’s weekly registrations for unemployment benefits, coming out at 223,000 new units, very close to the target and the floor of 200,000, proof if another was needed, of the tensions on the job market , tensions which force the Fed to apply the handbrake in its monetary easing process.

This Friday, forex traders will carefully follow the revised data from the American consumer confidence index (Conference Board), before the Conference Board index next week. Immediately, currency traders have just become aware of the first estimates of activity barometers, for industry and services, the famous PMI. For the European monetary union as a whole, the services PMI stood at 51.4, perfectly within the target, and the industrial component at 46.1, above the target, thanks to a less catastrophic score than expected of the German weighting of the index.

Dr. Cyrus de la Rubia, Chief Economist at Hamburg Commercial Bank, provided the following insights: “The industrial recession, on the other hand, continued at the start of the year, but the contraction eased slightly compared to December. Manufacturers of the area once again made significant reductions in their workforce, while their sales continued to decline. Manufacturing companies, however, declared themselves significantly more optimistic than at the end of the year, with respondents in fact anticipating growth in their sales. production in the year to come If Trump’s arrival in power could have, somewhat unexpectedly, favored this rebound in confidence, the improvement in the outlook for activity could also reflect the idea that, after almost two years of recession, the “The economy should return to the path of growth.”

At midday on the foreign exchange market, the Euro was trading against $1.0490 approximately.

KEY GRAPHIC ELEMENTS

The 50-day moving average (in orange) continues to constitute a solid technical and graphical barrier. In the shorter term, it is even its 20-day counterpart (in dark blue) which acts as dynamic resistance. And this without the RSI oscillator positioning itself in the oversold zone.

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 Euro Dollar (EURUSD).

Our entry point is at 1.0491 USD. The price target for our bearish scenario is at 1.0001 USD. To preserve the capital invested, we advise you to position a protective stop at 1.0609 USD.

The expected profitability of this Forex strategy is 490 pips and the risk of loss is 118 pips.

DAILY DATA CHART