EUR/USD: status quo expected on the Fed Funds, the interest of the FOMC is elsewhere

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This Wednesday is Fed Day! Bover will be able to analyze the outcome of a new monetary policy committee of the Federal Reserve, and read in hollow, the degree of affirmation of independence from the executive. An independence in principle that Donald Trump intends to undermine during his principal, he who requires, by verbal brutality, low rates …

Meet at 8:00 p.m. (Paris time) for the policy decision proper, which should not contain a surprise, but especially at 8:30 p.m. for the Fed press conference.

“The Fed must also prepare its return to school and Donald Trump has not waited for a long time to put pressure on Jerome Powell by judging that the rates should” drop immediately “. If the inflation figures recently surprised positively, members of the FOMC should nevertheless remain straight in their boots and maintain unchanged rates, “anticipates Thomas GIUDICI, head of bond management of Auris Gestion.

Nothing to wait on the rates proper, but the slightest inflection of tone, or the slightest variation in the elements of language used will be noted.

Emmanuel Auboyneau, Associate Manager at Amplegest warns that “the first post election meeting of Donald Trump will set the tone on monetary policy for the next quarters. Beyond the expected status quo is the message issued by Jerome Powell that will be scrutinized. On the reality of the first measures of the new president on future customs duties. “

Tomorrow, Thursday, it will be the turn of the European Central Bank to complete its Governors’ Council, the equivalent of the FOMC. Two close meetings which will be an opportunity to take the measure of the gap, in terms of objectives and strategy, between the two major banks on both sides of the Atlantic.

“Frankfurt monetary authorities should probably lower the key rate of 0.25 percentage points to 2.75 % at their meeting on January 30. By summer, two other reductions of the same order are to be expected , before the economic situation in the euro zone restarts slightly and the ECB finished its monetary softening, probably with a deposit rate of 2.25 %”, analyzes Dr. Felix Schmidt, Senior Economist at Berenberg.

In the statistical chapter Tuesday, monthly orders for durable goods (cars included) flanked by 2.2%, completely missing expectations. Richmond’s manufacturing index achieves an impressive ascent (-4) without managing to reintegrate the positive territory. As for the consumer confidence index (Conference Board), it appears at 104.1, not far from expectations, although slightly below.

At midday on the foreign exchange market, the euro was treated against $ 1,0420 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 1,0411 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 410 pips and the risk of loss is at 198 pips.

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