(News Bulletin 247) – The bearish energy released since Monday is fully expressed, sending the Euro ever closer to parity with the Dollar. If the opinion remains negative immediately, our targets remaining locked, we warn against the possibility, within a handful of sessions, of a sharp rebound in protest.
In terms of statistics, targets missed yesterday in the United States, whether for the deficit, albeit structural, of the trade balance of goods, inventories of wholesalers, current home sales, and oil stocks. This did not prevent the Dollar from continuing to rise against the Euro, in the nervous context of a contraction in risk appetite, and against a background of anticipation of an upcoming FOMC from the Fed, particularly closed.
The Fed’s rhetoric has in fact become particularly firmer, since J. Powell clearly put on the table the option of a 50 basis point hike in Fed Funds, from the next FOMC at the beginning of May, to deal with inflation which no one sees the “peak”. In addition to price dynamics, it will be particularly interesting to measure the evolution of tensions on the labor market, an essential and predictive criterion for wage increases. Verdict at the end of next week with the April NFP report.
“The foreign exchange market has a strong conviction: the rate increases will be significant in the United States in the coming months, which will support the rate of the American dollar”, slice William Gerlach, Country Manager France at iBanFirst, who confirms that “the US Federal Reserve’s FOMC meeting scheduled for May 3 and 4 should mark an acceleration in the process of monetary normalization in the United States in order to fight against inflation (which reached 8.5% in March on one year and could easily climb to 10% by June).
To follow as a priority, on the agenda this Thursday, across the Atlantic, the very first estimates of US GDP in Q1 as well as weekly registrations for unemployment benefits.
At midday on the foreign exchange market, the Euro was trading against around $1.05.
KEY GRAPHIC ELEMENTS
Since its clear exit from a broad consolidation wedge on April 4, the selling side has been confident, with 17 red bodies over the last 20 candles drawn. A break of a fragile intermediate floor at $1.0850, which we characterized as a safeguard, released additional selling energy, in a bout of volatility. This now validated break leads to the locking of new bearish targets, towards $1.0250. It will then be time to anticipate in a contrarian way a powerful rebound of contestation.
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 1.0508 USD. The price target of our bearish scenario is at 1.0251 USD. To preserve the invested capital, we advise you to position a protective stop at 1.0566 USD.
The expected return of this Forex strategy is 257 pips and the risk of loss is 58 pips.
CHART IN DAILY DATA
©2022 News Bulletin 247
I am currently a news writer for News Bulletin247 where I mostly cover sports news. I have always been interested in writing and it is something I am very passionate about. In my spare time, I enjoy reading and spending time with my family and friends.
