EUR/USD: Towards more firmness in US monetary policy

by

(News Bulletin 247) – The bevel exit (wedge) from below is now fully validated on the spot Euro / Dollar. The single currency, one of the reference barometers of risk appetite, marked the fear of operators with the announcement of a new salvo of sanctions against Russia. At the same time, the greenback was gaining points as it approached Minutes (this evening 8:00 p.m. Paris time). Currency traders will be all the more attentive as several indices call for a firmer tone from the Fed, which has already begun to negotiate its monetary shift. Ms. Brainard, at an event organized by the Minneapolis branch, campaigned for more firmness in monetary policy, while she is rather known for being neutral, namely neither frankly hawkishnor frankly dovish. See you at 8:00 p.m.

“The Fed wants […] use its tools to moderate the growth in demand, thus facilitating a continuous and sustainable increase in employment and wages”, for Alexandre HEZEZ, Strategist at RICHELIEU.

In terms of statistics yesterday, the final data for the “PMI services” (IHS Markit) for the month of March in the Euro Zone came out, at 55.6 points, beyond the target. Chris Williamson, Chief Business Economist at S&P Global comments on the latest figures from the PMI survey: the region grew again at a healthy pace in March, extending the rebound in growth that occurred after the slowdown seen in January.” RAS, on the other hand, for the American services ISM, which came out in line with expectations.

To follow crude stocks across the Atlantic at 4.30 p.m. and the traditional Fed Minutes at 8 p.m. Published at 11:00 am, the producer price index in the Euro Zone for February came out at +1.1%, after a surge of 5.1% (slightly revised) in January.

US government bond yields LT (Treasuries 10 years) were still gaining ground by exceeding 2.62% on Wednesday.

At midday on the foreign exchange market, the Euro was trading against $1.0910.

KEY GRAPHIC ELEMENTS

As long as the spot quotes above $1.10, the supply of oxygen is guaranteed. On this side, there is no lack of technical arguments to justify the taking of selling positions. In the immediate term 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. Confirmation of the formation of a 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. A break in the lower boundary would accelerate the clearances. This has now been fully validated.

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).

Our entry point is at 1.0915 USD. The price target of our bearish scenario is at 1.0686 USD. To preserve the invested capital, we advise you to position a protective stop at 1.0971 USD.

The expected return of this Forex strategy is 229 pips and the risk of loss is 56 pips.

CHART IN DAILY DATA

©2022 News Bulletin 247

You May Also Like

Recommended for you

Immediate Peak