(News Bulletin 247) – Bearish, the “short term” and the “medium term” aligned with the Euro / Dollar currency pair, under the triple effect of new accommodating remarks from Christine Lagarde, IMF comments on Chinese growth , and an epidemic topicality which raises questions in Europe.
On the occasion of the opening of the European Banking Congress, the President of the European Central Bank once again insisted on the transitory nature of inflation, and wished to wipe out any scenario, at least in the short term, of hardening. monetary policy, so as not to jeopardize the recovery. What confirms the increase in the differential of “remuneration” between the Dollar and the Euro, even though the probabilities of a first turn of the screw from July 2022 are increasing. As a reminder, earlier in the week, EuroStat confirmed, on an annualized basis, a price increase of 4.1% in the monetary union. The increase is even revised downwards for prices corrected for volatile elements (food, energy, alcohol and tobacco), to 2.0%, against 2.1% initially calculated.
The single currency, a barometer of risk appetite, also paid for the return of tough measures to combat the new wave of contamination. Starting with Austria, which has just decreed a new general containment of its population, and compulsory vaccination from February 1. Germany does not rule out new confinement either, according to Health Minister Jens Spahn.
In the statistical chapter yesterday, the manufacturing index of the Philadelphia Fed, came out with a strong surprise increase, to 39.0, beating the target flatly. On the other hand, weekly registrations for unemployment benefits were slightly disappointing. They will have had the advantage of not putting more pressure on the Fed. In addition, the OECD now estimates that the French economy should grow around 6.8% this year (against 6.3% previously), thanks to a stronger-than-expected recovery since the summer, in a study published. Thursday.
Already published at 8:00 am this Friday, German “producer” prices soared, at + 3.8% monthly (from one month to the next), literally exploding the consensus.
At midday on the forex market, the Euro was trading against 1,1300$ about.
KEY GRAPHIC ELEMENTS
We clarified the following on Wednesday, as a reminder: “A break in a fragile support zone at 1.1530 would increase volatility. The working band between $ 1.1530 and $ 1.1675 would then be obsolete.” This zone gave way, with validation by volatility. The current seller is thereby strengthened. Next bearish target locked at $ 1.1150. And this without excluding the possibility of a pullback on the $ 1.1530.
As a result, a sharp punctual reaction of protest will have to be considered.
MEDIUM-TERM FORECAST
In view of the key graphical factors that we have mentioned, our opinion is negative in the medium term on the pair Euro Dollar (EURUSD).
Our entry point is at 1.1305 USD. The price target for our bearish scenario is at 1.1151 USD. To preserve the committed capital, we advise you to position a protective stop at 1.1376 USD.
The expected return on this Forex strategy is 154 pips and the risk of loss is 71 pips.
DAILY DATA CHART
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Source: Tradingsat
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