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#1 23-02-2021 13:39:25

johnedward
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From: Paris - France
Registered: 21-12-2009
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EUR/USD: a firm direction remains elusive

EUR/USD: a firm direction remains elusive


The pair continues its erratic oscillations around $1.2145, the spot being subject to headwinds, between notable improvements in health on both sides of the Atlantic and fears of a too rapid rise in prices.

Does this future inflationary "push" worry the Fed? "Not as things stand," according to Vontobel AM research. "In fact, it is likely that it will welcome it to some extent since the increase in inflation forecasts will support its objectives. In view of the number of jobs to be created, it does not intend to look at its monetary policy any time soon, but the job creation curve will have to be carefully monitored".

On this side of the Atlantic, according to CIC Market Solutions Research, "the ECB is seeing a less buoyant environment in the short term, especially with the new variants, but one that is better oriented in the medium term between health improvement, recovery and a more favourable international context. Since this meeting, the significant reduction in contamination has reinforced the idea of a major rebound, which will nevertheless take several months to materialise".

It is therefore the finesse in the "steering" of the rate curve, on both sides of the Atlantic, which will constitute a powerful market driver for the coming months on the currency pair.

"The rise in US long rates is weighing on the prospects for growth in economic activity in the United States and Jerome Powell could remain very accommodating", for Aurel BCG.

On Monday the single currency was supported by the IFO business climate index in Germany, the leading economy in the Euro Zone. The index rose to 92.5 this month, above the consensus. For the time being, there are no surprises to report regarding inflation in the Euro Zone, confirmed at 1.5% in annualised terms in volatile adjusted data.

As of right now, the EUR/USD pair is trading at $1.2143.

KEY CHART ELEMENTS
As we mentioned yesterday, exceeding the 20-day moving average (in dark blue) invites us to take "time out". The inscription of a significant high wick (shadow) on the candle of the day would, if necessary, change the situation, but we are not there yet. Neutral advice for the immediate future: active traders should therefore avoid taking a stand until a suitable entry point is found.

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 EUR/USD remains positioned between support at $1.2099 and resistance at $1.2210.

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