EUR/USD: Neutrality before Jackson Hole

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At mid-session, the Euro/dollar pair evolves without much momentum, oscillating around 1.17, after having marked a regular progression last week. The European currency nevertheless retains a solid base, supported by the decline in the greenback against the backdrop of monetary relaxation anticipation in the United States and flows to European assets. This stability comes as the markets focus on a dense week in macroeconomic signals and political events.

On the macroeconomic level, investors digest mixed data in the United States: on the one hand, robust retail sales in July and an increase in wholesale prices, on the other, downward revisions which highlight a latent slowdown in the labor market. This contrast feeds speculation around the federal reserve, the September meeting of which could give rise to a drop in rate. The markets already include a probability of more than 80 % for a monetary relaxation of 25 base points, some actors even evoking the scenario of a longer series of reductions.

The Jackson Hole symposium, which will start on Thursday, will be the major meeting of the week. President Jerome Powell will give a much anticipated speech, likely to specify the trajectory of American monetary policy. The balance between the need to contain inflation, another point above the objective, and that of preserving employment, remains delicate. Powell’s communication on this dilemma could strongly influence market expectations.

Geopolitically, the meeting scheduled for Washington this evening between Donald Trump and Volodymyr Zelensky concentrates attention. After a summit in Alaska with Vladimir Putin deemed conciliatory with regard to Moscow, the American president now exerts increased pressure on kyiv to accept a rapid peace agreement, even if it means yielding territories. This approach arouses concerns in Europe, even though European leaders will be received in the process of the White House. The immediate challenge is to avoid an overly marked imbalance in favor of Russia in the future peace plan.

Finally on the technical level, the euro remains resolutely upward-oriented above its ascending oblique in the medium term. As long as the currency retains fences beyond 1.14, the bias remains bullish, with potential targets located at 1.20.

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 1,1683 USD. The course of course in our Haussier scenario is at 1.2000 USD. To preserve the committed capital, we advise you to position a protection stop at 1,1380 USD.

The profitability hope of this Forex strategy is 317 pips and the risk of loss is 303 pips.

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