EUR/USD: new questions for trade

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The euro, one of the barometers of appetite for the most reliable risk on the financial markets, put pressure on an old level of resistance to the dollar, the day after the targeted strikes ordered by the White House on Iranian nuclear sites.

Surgical by their precision, but massive by their power, these strikes targeted in particular the Fordo site, at the heart of the nuclear issues of the mullahs regime. This uranium enrichment site, built nearly 100 meters underground in a mountainous region, was particularly difficult to reach.

Three main questions will now fully occupy the spirits of the trades:

1) What is the level of success, in terms of objectives, of these strikes?

2) Is the general embrace in the Middle East now inevitable?

3) Will the crude, currently at $ 75, a barrel (Reference Texana) will flambé in the coming weeks?

But while waiting for these major clarifications, the fundamental directional is undoubtedly bruised for the euro.

“The distrust of the dollar results from the erratic commercial policy of the Trump administration and questions about its budgetary strategy”, analyzes Christopher Dembik, investment strategy advisor at Pictet AM by taking a step back.

“As long as these doubts are not lifted, it is difficult to see how the dollar could rebound lastingly. An additional drop of -5-7 % of the Dollar Index by the end of the year does not seem aberrant to us … while recognizing that the forecasting exercise on Forex is very dangerous.”

In the statistical chapter on Friday, the operators took note of a surprise drop in the manufacturing index of the Fed of Philadelphia (Philly Fed), at -1.0. This morning, the trades were able to read the first estimates of activity barometers (PMI) for services and industry in the euro zone. No notable surprise on the scale of the entire monetary union, the results proving to be very close to the consensus. Note a pleasant surprise on the side of the component of the German services, stands out at 49.4, a level close to the 50 points bar which as a reminder constitutes by construction a separation between contraction (below) and an expansion (above).

Two essential meetings to note this week: the confidence index of American consumers (Conference Board), expected tomorrow upon 99.1 and the PCE prices, Fed favorite measure in its appreciation of inflation on Friday.

At midday on the foreign exchange market, the euro was treated against $ 1,1465 approximately.

Key graphics elements

Thursday, June 12, the spot freed from the grip of a resistance zone at $ 1,1460, a zone which is already early tested, in the form of a sweater This Friday. The absence of upward expansion after the crossing of the $ 1,1460 is doubted about the capacity of the spot to continue in the coming weeks its substantive ascending movement. The test of the mobile average at 50 days (in orange) will therefore be essential. In the immediate future, a continuation of the oscillations without amplitude, in lateral technical camisole, is envisaged. Unless the $ 1,1460 were to break up suddenly. For the moment, a simple support is underway.

Medium term

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

We will keep this neutral opinion as long as the courses of Euro Dollar parity (EURUSD) are positioned between the support at 1,1460 USD and the resistance to 1,1674 USD.

Daily data graphics