EUR/USD: Solid support for the mobile average at 50 days

(BFM Stock Exchange) – This article, with free access, is produced by the research team in BFM Stock Exchange analysis and market strategy. To not miss any opportunity, consult all of the analyzes and discover our portfolios by accessing our privilege space.

Little graphic change as the monetary policy of the European Central Bank approaches, a meeting which will end on Thursday. After seven consecutive drops, the ECB should after this Governors’ Council, validate a break from the Euro “rent”.

David Zahn, head of European bond management at Franklin Templeton, anticipates: “The ECB should maintain its unchanged rates, a drop in September remains possible but unlikely. The markets will be attentive to Christine Lagarde’s speech concerning commercial risks and the strength of the euro. Inflation is close to the objective, but tariff threats combine the prospects. will determine the reaction of the markets. “

On the price threats mentioned, the deadline of August 1 approach.

“Given the great uncertainty about the outcome of negotiations (on customs duties between the United States and the European Union), we do not modify, at this stage, our economic forecasts or our call for a break during the BCE’s July meeting, followed by two decreases of 25 basis of the key rate, in September and December”, explain the economists of Barclays.

“Although we did not exclude the possibility that the United States and the EU reach a provisional agreement by August 1 which would maintain average customs duties on most EU products at 10%, we think it is more likely than improbable thanhe customs duties on the EU increase from 10%, but without reaching 30%“, they add.

On the Statistical Front, the Bovers learned on Friday of the preliminary data of the “U-Mich” index of consumer confidence across the Atlantic, released slightly above expectations at 61.8. Conjugated with the very good detail dynamics published earlier in the past week, this statistics reveal the health health of the consumer across the Atlantic. What give even more credit to the scenario of a status quo Monetary at the end of the month, no offense to Donald Trump.

“President Trump has renewed his attacks on Jay (Jerome) Powell at the start of the week, apparently by asking a group of republican legislators if he had to dismiss the president of the Fed. The reason? He considers that interest rates are too high. However, it is far from being obvious that the American economy currently justifies heavy drops of rate, if it is needed,” said J. Sarasin in a note published this Friday.

However, Christopher Waller, one of the FED governors, said it displayed “his preference for a drop of 25 base points (0.25 percentage points) at the end of July” during a speech in New York.

“However, Waller is unlikely to obtain the support of the FOMC (Monetary Policy Committee of the Fed, editor’s note) in July and that is why the movements on the bond market are modest,” said Jim Reid Economist at Deutsche Bank.

Trump keeps calling Jerome “Too Late” Powell to lower the dollar rent. However, the latter justifies its cautious attitude by the inflationary effects still difficult to quantify extreme budgetary and commercial policies of the White House.

Yesterday, the operators on currencies learned of the index of the advanced indicators of the Conference Board, in contraction of 0.3%. To be continued at 4:00 p.m. on Tuesday the manufacturing index of the Richmond Fed, expected up, although in negative territory at -2.

At midday on the foreign exchange market, the euro was treated against $ 1.17 approximately.

Key graphics elements

While the 1,1674 were broken in a certain volatility, we are waiting to gauge the quality of the reaction of spot In contact with the mobile average at 50 days (in orange). So far, this substantive trend curve plays a significant support role, as precise as it is predictive. It is a powerful tool.

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 1,1695 USD. The course of course in our Haussier scenario is 1,2464 USD. To preserve the committed capital, we advise you to position a protection stop at 1,1459 USD.

The profitability hope of this Forex strategy is 769 pips and the risk of loss is 236 pips.

Daily data graphics