(News Bulletin 247) – The Euro remained in a delicate position against the safe-haven Dollar, while risk appetite remained at a standstill, the 27 getting ready to agree on a sixth package of economic sanctions against Moscow, following yesterday’s meeting in Brussels of EU Energy Ministers.
Across the Atlantic, the Fed today begins a two-day meeting of its Monetary Policy Committee (FOMC) which should end with a 50 basis point rise in Fed Funds. The question that remains, and which will focus the attention of forex traders at a press conference, is that of a possible “easing”, with the necessary quotation marks, of the rate hike trajectory, following the publication of the first unprepossessing estimates of US growth for the first three months of the year…
“If the publication, prima facie, at -0.4% in quarterly variation of the American growth (-1.4% in annualized against +1% expected) marks a clear slowdown compared to the last quarter (+6.9% in annualized), the reading in more detail of the components shows a more resilient image of the American economy”, nevertheless qualifies Thomas GIUDICI, Co-head of bond management at AURIS Gestion. “Indeed, GDP was mainly impacted by a booming trade deficit (-3.2 pts), aimed at rebuilding stocks of consumer goods, as well as by reducing public spending. At the same time, consumption continues to hold up well, with, for example, a further increase in consumer spending in April (+1.1% against +0.6% expected and +0.6% the previous month), despite the high inflation on almost all goods.”
In terms of statistics yesterday, the manufacturing PMI activity index in final data for the month of April in the Euro Zone came out at 55.5, very close to expectations. Chris Williamson, Chief Business Economist at S&P Global commented on the PMI survey in these terms: “Strong inflationary pressures are likely to weigh on demand. many products out of stock at suppliers, has led to the largest increase in manufacturers’ selling prices in at least two decades of comparable data collection for this variable. going through a difficult period of declining production and soaring prices.”
To follow this Tuesday, the new job offers in the United States (JOLTS) at 4:00 p.m. Published at 11:00 a.m., the unemployment rate in the Euro Zone contracted to 6.8% of the active population, in line with expectations.
At midday on the foreign exchange market, the Euro was trading against $1.0520 approximately.
KEY GRAPHIC ELEMENTS
Since its clear exit from a wide consolidation wedge on April 4, the selling side has been confident, with 19 red bodies over the last 23 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 positive in the medium term on the Euro Dollar (EURUSD) parity.
Our entry point is at 1.0514 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 1.0651 USD.
The expected return of this Forex strategy is 263 pips and the risk of loss is 137 pips.
CHART IN DAILY DATA
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