EUR/USD: continuation of the ascent

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The pair of Euro / dollar currencies remained in a marked ascending phase, with the increasingly clear prospect of American monetary easing. UBS economists foresee “a cumulative decrease of 100 basic points of guiding rates over the next twelve months, probably from September, in a context of slowing down economic growth. We anticipate a drop in yields to 10 years worldwide by the end of the year, driven by the slowdown in growth, the drop in inflation and the monetary relaxation.”

According to the CME Group’s Fedwatch tool, the probabilities of dropping Fed Funds at the end of next month now exceed 20%.

Bover naturally continues to monitor the slightest declaration on customs duties while the deadline of July 9 is approaching. But the Trump administration has suggested that negotiations and potentially the suspension of the heavy customs from customs, could extend beyond this deadline. Enough to play in favor of the euro, one of the most reliable barometers of the appetite for the risk.

On the indicators side, inflation in the euro zone is generally emerged in line with expectations, with an increase in prices of 2% over one year in June after 1.9% in May. “The slight increase in total inflation in June was expected, but underlying inflation remains stable for its part,” notes Juliette Cohen of CPR AM.

The increase is 2.3% if you remove energy, food, alcohol and tobacco from the basket, the most volatile elements.

“The mission of the European Central Bank is generally accomplished and a break can now be envisaged unless additional trade tensions between Europe and the United States are not materialized in the coming weeks,” continues the decideer in asset management.

In addition, the final data of PMI activity indicators in industry in the euro zone, have hardly been excluded from the first estimates, at 49.5. Dr. Cyrus de la Rubia, chief economist at the commercial Hamburg Bank has brought the following additional lights:

“The Manufacturing sector of the euro zone shows signs of stabilization at the end of the second quarter. Production has increased somewhat for a fourth consecutive month, the new orders have stopped falling back and the slight extension of the delivery times of inputs recorded during the month testifies to a modest resumption of demand. These positive developments highlight the resilience of the sector in the current context Linked to the customs policy of the United States, the crisis in the Middle East and the war between Russia and Ukraine.

The Manufacturer’s ISM will be followed at 4:00 p.m., as is the new job offers (Jolts), in a precious taste before the publication, Thursday once is not customary, of the NFP (non-Farm Payrolls) report on private employment health. Friday, Wall Street will remain closed for July 4 (Independence Day).

At midday on the foreign exchange market, the euro was treated against $ 1,1815 approximately.

Key graphics elements

The release of the technical camisole is confirmed, coming to give more meaning to the supporting of the mobile average at 20 days (in dark blue).

The buying position on the spot can be kept as long as the oscillations are built between this trend curve and the high bollingger strips (20; 2.5).

The relative force index (RSI) is in full convergence with the courses.

Medium term

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

Our entry point is 1,1809 USD. The course of course in our Haussier scenario is 1,2213 USD. To preserve the committed capital, we advise you to position a protection stop at 1,1673 USD.

The profitability hope of this Forex strategy is 404 pips and the risk of loss is 136 pips.

Daily data graphics