EUR/USD: Harami lowering before two major monetary meetings

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The euro / dollar, after a breathing phase, was already suffering in contact with the high bollinger strips (20; 2.5), validating a combination of candles in haramion the eve of important monetary meetings, on both sides of the Atlantic.

The Fed will be the first to complete, tomorrow 29/01, its monetary policy committee (FOMC). “The Fed will remain pending during the FOMC meeting in January, although recent data could suggest a slightly less restrictive posture than in December. The last statistics on inflation maintain the possibility of new rate drops, even If they would be limited, and the job market – despite a strong hiring dynamic – is not currently a source of inflationary pressure. chief for the United States of DWS.

Emmanuel Auboyneau, associate manager at Amplegest, abounds: “The first post election meeting of Donald Trump will set the tone on monetary policy of the next quarters. Beyond the expected status quo is the message issued by Jerome Powell who will be scrutinized. Uncertainties on the reality of the first measures of the new president on future customs duties. “

The European Central Bank (ECB) will follow suit the next day with the end of its council of governors, the European equivalent of the FOMC. The powerful Central Bank of Frankfurt clearly does not face the same challenges.

“Unlike the United States, Europe is not faced with an imminent risk of economic overheating, the growth forecasts remaining significantly below potential growth” euphemate Benédicte Kukla, Senior Investment Manager and Alexander Bell, CFA fixed Portfolio Manager at Indosuez Wealth Management, who think that “the European Central Bank (ECB) should reduce its rates by 25 base points, Thursday, January 30, as well as during the following two meetings.” . “Although the January figures in Europe can show a certain volatility due to annual adjustments and tax changes, we anticipate a slowdown in inflation during the first half,” they complete.

It is clearly a dichotomy, strategy and objectives, which sets up between the FOMC and the Council of Governors. “The possible divergence between monetary policies could result in an increase in the short -term dollar,” anticipates Claudia Panseri, Chief Investment Officer at UBS WM France. “We plan that the Fed will reduce its rates twice this year, totaling 50 basic points in total; these decreases should not intervene before the second and third quarter. The European Central Bank should lower the rates From 100 base points during the first half.

To be continued this Tuesday, a dense and rich macroeconomic program on the other bank of the Atlantic, with, among other rejoicing, orders for sustainable goods, the S&P index Schiller real estate prices in around twenty representative agglomerations of the market , the manufacturing index of the Richmond Fed and the sacrosanct consumer confidence index (Conference Board).

At midday on the foreign exchange market, the euro was treated against $ 1,0430 approximately.

Key graphics elements

The continuous 50 -day (in orange) mobile average constitutes a solid technical and graphic barrier. In the shorter term, it is even his counterpart at 20 days (in dark blue) that officiates as a dynamic resistance. And this without the RSI oscillator positioning itself in the occurrence zone. In the immediate future, the pair of currencies traces, in the upper part of the Bollinger bands, a negative structure in harami. Once the parity is perfect, namely $ 1 for a €, an energetic purchase of protest can be set up.

Medium term

In view of the key graphic factors that we have mentioned, our opinion is negative in the medium term on Euro dollar parity (Eurusd).

Our entry point is 1,0432 USD. The price of course in our lowering scenario is 1,0001 USD. To preserve the committed capital, we advise you to position a USD 1,0609 protection stop.

The profitability hope of this Forex strategy is 431 pips and the risk of loss is 177 pips.

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