EUR/USD: dense macroeconomic agenda before Jackson Hole

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Euro-Dollar parity evolves at the heart of an environment where American monetary policy remains the main catalyst. The report of the last meeting of the Federal Reserve revealed an unusual fracture between its members. A continuous majority of favoring the fight against inflation, perceived as fueled by the increase in customs prices, while part of the council already pleads for rapid relaxation in order to counter the degradation of the labor market, marked by a rise in unemployment. These divergences make Jackson Hole’s Jackson Hole’s symposium particularly awaited: it could draw the roadmap for the next few months, in a context where Donald Trump’s repeated attacks are weakening the independence of the Fed and maintain a climate of distrust.

Political and commercial tensions strengthen this uncertainty. Washington pressure on the Chinese technological sector, restrictions on semiconductors and the lack of tangible progress on the Ukrainian front maintain substantive volatility. These elements are added to the increased sensitivity of the markets in the face of the Fed signals, accentuating the dollar movements.

In Europe, the latest cyclical indicators provide contrasting but encouraging lighting. The economic activity of the European block has accelerated slightly in August, with a composite index for more than a year. The surprise came from the manufacturing industry, which returns to the growth zone for the first time in more than three years, carried in particular by Germany. The services continue their expansion but on a more moderate pace, while France gives signs of stabilization after several months of withdrawal. These results reflect a European economy which, despite the pressure exerted by inflation and trade tensions, retains a resistance capacity.

In the very short term, attention is focused on the American indicators expected this afternoon: weekly unemployed registrations, manufacturing index of the Fed of Philadelphia, PMI and sales of existing housing. These publications will provide concrete elements on the state of the American economy, on the eve of Jerome Powell’s speech, and could adjust market anticipations concerning the trajectory of rates.

On the technical level, the euro maintains a solid upper orientation above 1.14. This threshold constitutes a major pivot: as long as it remains preserved, the operators retain a positive bias, considering an extension to higher levels, possibly 1.20, provided that the next catalysts – whether it be the American data or the discourse of Jackson Hole – do not reverse this dynamic.

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 1,1657 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 343 pips and the risk of loss is 277 pips.

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