EUR/USD: Tomorrow, it’s Fed Day …

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The dollar lost a few pips Faced with the euro, on the eve of the outcome of a FOMC (monetary policy committee). The conclusions of this meeting will be very followed, both from the point of view of monetary policy decisions proper and the updating the economic projections of the Fed and the press conference. The probabilities of a 25 basis drop in the remuneration of the Fed Funds borders on 100%, without reaching them fully. Is that the difference is for a scenario at -50 basic points …

The Fed has clearly paved it to this monetary easing, from Jackson Hole, based on a marked slowdown in the labor market. Since then, the inflation figures, both for consumer prices and production prices, have never surpassed consensus, strengthening the working hypothesis of a new switchback on the lower dynamics on fefely rates.

Harvey Bradley, manager of the BNY Investments Absolute Return Bond, thinks that “the Fed is probably worried about seeing job creations turn into job destruction, which would result in a new cycle of layoffs and a drop in consumer expenses. Supporting the labor market by drops in rate means maintaining the balance of the economy and preserving the” full employment “part of its mandate.

The “studs”, that is to say the projections (and not the forecasts) of the Fed members will be closely monitored, with regard to the weakness of the job market. Like the question of the independence of the Fed, after the appointment by President Donald Trump of one of his economic advisers, this Monday, September 15.

Verdict at 8:00 p.m. tomorrow for the decision and the plots dowry (points diagram), and at 8:30 p.m. for the closing press conference.

It is therefore not the question of French public debt which animates the debates on the pair of currencies, although “France brings a little spice to European tranquility”, but “it is indeed across the essential”, decides Thomas GIUDICI, head of the bond management of Auris Gestion.

“Two risks remain nevertheless. The first – which encourages us to maintain a prudent posture – would be a more marked weakening than anticipated by the job market, forcing the Fed to lower its rates either by comfort but by necessity, in order to counter a real economic degradation. The second, in contrast, would be a resurgence of inflation supplied by an overwhelming monetary. Resilient, which would force the Fed to turn back earlier than expected. “

On the statistical front, very good news across the Atlantic on retail sales (+0.7% monthly out of automobiles), much above the consensus. A reassuring figure after the publication at the end of last week of the consumer confidence index (U-Mich, preliminary data).

At midday on the foreign exchange market, the euro was treated against approximately $ 1,1800.

Key graphics elements

The slaughtered oblique in black decks, defining the quality of the bottom bullish trend. Following a new support on this benchmark, the Bollinger bands are initiating a slight spacing, we resume our upcoming work on the pair of currencies, which has sufficiently consolidated.

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 1,1801 USD. The course of course in our Haussier scenario is 1,2465 USD. To preserve the committed capital, we advise you to position a protection stop at 1,1599 USD.

The profitability hope of this Forex strategy is 664 pips and the risk of loss is 202 pips.

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