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#1 04-08-2020 13:35:07

johnedward
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From: Paris - France
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EUR/USD: consolidation is still being defined, EUR is holding strong

EUR/USD: consolidation is still being defined, the EUR is holding strong


The Euro continued to show a pattern of consolidation against the USD, quite legitimately after the advance last month. There is no certainty at this stage about the magnitude or form of this consolidation, the framework of which has not yet been fully defined.

As a reminder, the USD clearly paid for President Trump's wanderings on the management of the virus crisis which made the United States, to date, the most bereaved country on the planet, with more than 153,500 deaths caused by the virus. The number of new daily cases is finally beginning to fall significantly. The prospect of an election for Joe Biden, which would rhyme with a skyrocketing corporate income tax (CIT), continues to weigh on the gap between the two candidates in the polls.

In addition, geopolitical, diplomatic, commercial and technological tensions - all of which are closely linked - have weighed on the greenback's momentum over the past month, affecting its traditional status as a safe haven currency in favour of gold.

The macroeconomic news was clearly dominated by the SMMEs, in particular, in Germany, the industrial SMME for last month stands at 52 and for France at 52.3. A breath of fresh air above 50 points, which separates, by construction, a contraction from an expansion in the sector under consideration. For the euro area as a whole, the indicator came out at 52 last month, versus 47.3 in June, and a low point at 33.3 in May.

In the United States, the PMI (ISM), traditionally stronger than the IHS Markit PMI, also beat the target, rising sharply to 54.3.

In the immediate term, the structure of the consolidation of the single currency remains strong, with the support in particular of the producer price index in June, at +0.8% exceeding expectations for the Eurozone.

Right now, the pair is trading at $1.1761.

KEY CHART ELEMENTS

The currency pair is still in the initiation phase of a consolidation figure. It has not finished defining the scope of the figure. A remarkable candle this week, such as an inverted hammer for example, will give us valuable clues this week to refine a buy entry. The timing is not yet optimal for this. In the immediate future we have the 20-day moving average benchmark (in dark blue).

MEDIUM-TERM FORECAST

In view of the key chart factors we have mentioned, our opinion is neutral in the medium term on the pair's exchange rate.

We will maintain this neutral view as long as the pair is positioned between the $1.1745 support and the $1.2000 resistance.

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