EUR/USD: Perilous bevel navigation

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(News Bulletin 247) – Still just as volatile, the Euro/Dollar currency pair retreated to the top of the bevel (wedge) as risk appetite waned in equity markets on both sides of the Atlantic, while Kremlin pledges to “drastically” reduce military activity in the Cherniguiv region were not held. On Russia’s attitude after the meeting of the two delegations in Turkey, Thomas Giudici, co-head of bond management at AURIS Gestion, suggests the following reading: “if the statement by Russia, which now says it is focusing on the Donbass after having allegedly achieved its initial objectives, may appear as an admission of failure (even if a disinformation operation cannot be ruled out, as was the case during the pre-invasion military exercises), this does not however, does not bode well for an easing of the conflict. On the contrary, it could even get bogged down even more while, at the same time, Western countries are forming a common front and gradually tightening their sanctions.” Talks are expected to resume tomorrow in Turkey. In the meantime, Moscow “promises” a ceasefire in Mariupol.

In the immediate future, the inflationary question (itself linked to geopolitics, moreover) and the tensions on the job market (themselves generating inflation, that is the complexity of the equation). .will be at the heart of the debates. First elements of response this morning with confirmation of an acceleration in inflation in France, beyond expectations, and tomorrow with the monthly federal employment report. Yesterday, the ADP survey (Automatic Data Processing) emerged right at the heart of the target, with a highlighting of 455,000 job creations in the private sector (excluding agriculture). Disappointment on the final data for US GDP in the fourth quarter at +6.9% against 7.0% expected.

For France, including energy and food, “inflation should exceed 5% in the coming months, before falling sharply” for Charlotte de Montpellier, an ING economist. “For the next few months, we expect inflation to continue to rise, driven by energy and food prices, but also by inflationary pressures that are increasingly spreading to all sectors of the economy. economy. We believe that a quarter of negative GDP growth cannot be ruled out. Demand will therefore lose momentum, which will impact the power of companies to set higher prices, limiting tensions We expect inflation to average above 4% for the year 2022, but then decline rapidly and remain below 2% in 2023.”

To be monitored are weekly registrations for unemployment benefits, household income and expenditure as well as PCE prices (personal consumption expenditures), one of the Fed’s preferred measures for assessing the level of inflation.

At midday on the foreign exchange market, the Euro was trading against $1.1130 about.

KEY GRAPHIC ELEMENTS

As long as the spot will be priced above $1.10, the oxygen supply is assured. On this side, there is no lack of technical arguments to justify the taking of selling positions. In the immediate future and in the absence of an interesting chart entry point, traders will avoid exposure. Regarding the substantive work matrix, it remains unchanged. The transition phase between February 4 and 23, in the form of a slip without federation, under the 100-day moving average (in orange) is over. The underlying bearish bias aligns with the short term, and the plot of a candle conspicuous by its red body on Thursday 2/24 illustrates the firm grip of the selling side. With 5 red-bodied candles from March 1 to 7, and continued selling mobilization in week 09, the picture remains gloomy. The confirmation of the formation of a bevel (wedge) is in progress. A navigation within it is still to be expected. We will therefore monitor its two terminals, represented in black on our graph.

MEDIUM TERM FORECAST

In view of the key graphic factors that we have mentioned, our opinion is neutral in the medium term on the Euro Dollar (EURUSD).

We will keep this neutral opinion as long as the Euro Dollar (EURUSD) parity prices are positioned between the support at 1.1000 USD and the resistance at 1.1140 USD.

CHART IN DAILY DATA

©2022 News Bulletin 247

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