EUR/USD: 20-day moving average pressure

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(News Bulletin 247) – The Euro/Dollar went back below the $1.10 mark for one euro on Monday, in the context that is still not very conducive to risk taking with the Russian invasion of Ukraine. Invasion which marks a pause, which leaves open all the possible scenarios: capitalization and consolidation of the morale of the Russian troops, signal of failure, possibility of diplomatic negotiations. In any case, J. Biden chose the moment very badly to launch, at the very end of his European tour, a sentence which, if it probably translates his thoughts faithfully, does not have the diplomatic tone required by the exercise: “For love God, this man cannot stay in power”. The man who had firmly warned that “the Russian army must not advance even one centimeter into NATO territory” will he have poured oil on the fire at the very moment when the diplomatic door opened?

Currency traders also have a worried gaze turned towards China, whose city of Shanghai (26 million inhabitants, the country’s largest city, and major financial center) must once again undergo strict confinement. “In response to this information, the price of WTI oil is falling back below $110, for fear of a greater economic slowdown in China than previously anticipated. On the other hand, this could lead China to announce strong measures to support the economy. ‘economy and the financial markets,” analyzes Vincent Boy in a morning note for IG France.

To follow in priority, on the agenda this Monday, the American trade balance of goods at 2:30 p.m.

At midday on the foreign exchange market, the Euro was trading against $1.0960 about.

KEY GRAPHIC ELEMENTS

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. We are reviewing our bearish targets, at $1.0848, then $1.0685. Note the firm resistance role of the 20-day moving average (in dark blue).

MEDIUM TERM FORECAST

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

Our entry point is at 1.0965 USD. The price target of our bearish scenario is at 1.0686 USD. To preserve the capital invested, we advise you to position a protective stop at 1.1076 USD.

The expected return of this Forex strategy is 279 pips and the risk of loss is 111 pips.

CHART IN DAILY DATA

©2022 News Bulletin 247

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