(News Bulletin 247) – Let us first recall the major technical fact of the past week, namely the break without any form of hesitation of a technical floor at $ 1.1530 after the publication of the US inflation figures, which showed a rise above consumer price expectations. Enough to bring more credit to a first hike in federal rates in July. It is this prospect of an increase in the “remuneration” differential between the two spot currencies that feeds the bullish bias of the greenback.
In the statistical chapter Friday, to report a statistic less alarming than expected on the dynamics of industrial production in the countries of the monetary union (-0.2% monthly rate in September). On the other side of the Atlantic, target exceeded for new job offers (JOLTS) in September, while the consumer confidence index (U-me) in preliminary data for the current month, fell to 66.8 from 71.7 in October.
The program will be heavy this week, with retail sales in the US in particular tomorrow, and the Philly Fed on Thursday, among other celebrations. To be monitored this Monday, the NY Fed’s manufacturing index at 2:30 p.m. Published overnight, the dynamics of Chinese industrial production exceeded expectations, at + 3.5% in October, at an annualized rate. In the immediate future, traders learned about the dynamics of the trade balance in the Euro Zone. The first seasonally adjusted surplus estimates for September showed a significant contraction, to 6.1 billion euros, missing the target by twice.
As a backdrop, with a strong potential impact on the spot, the forex traders will follow “the meeting between the Chinese president and his American counterpart Joe Biden. The latter are to meet, virtually, Tuesday morning and should discuss many subjects. The Chinese president could in particular insist on the case of Taiwan, supported by the United States while China maintains its discourse of control over the archipelago “, for Vincent Boy (IG France).
At midday on the forex market, the Euro was trading against 1,1450$ about.
KEY GRAPHIC ELEMENTS
We clarified the following on Wednesday, as a reminder: “A break in a fragile support zone at 1.1530 would increase volatility. The working band between $ 1.1530 and $ 1.1675 would then be obsolete.” This zone gave way, with validation by volatility. The current seller is thereby strengthened. Next bearish target locked at $ 1.1150. And this without excluding the possibility of a pullback on the $ 1.1530.
MEDIUM-TERM FORECAST
In view of the key graphical factors that we have mentioned, our opinion is negative in the medium term on the pair Euro Dollar (EURUSD).
Our entry point is at 1.1450 USD. The price target for our bearish scenario is at 1.1151 USD. To preserve the committed capital, we advise you to position a protective stop at 1.1531 USD.
The expected return on this Forex strategy is 299 pips and the risk of loss is 81 pips.
DAILY DATA CHART
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Source: Tradingsat
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