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#1 02-03-2021 10:36:18

johnedward
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From: Paris - France
Registered: 21-12-2009
Posts: 3050
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EUR/USD: a crucial technical test

EUR/USD: a crucial technical test


The high-stakes test of the 100-day moving average (in orange) on the EUR/USD is underway as risk appetite is gradually weakening. The USD was boosted by the adoption by the House of Representatives of Joe Biden's $1.9 billion stimulus package, the high end of the plan. As did the FDA's validation of the Covid vaccine developed by Johnson & Johnson.

"The US regulator's decision to officially authorise the Covid vaccine developed by Johnson & Johnson this weekend should boost vaccination campaigns around the world, particularly in emerging countries, given the relative economic profitability of the vaccine," according to investment research by Pictet Health Mgmt.

In terms of statistics, investors have taken note of the industrial PMIs in final data for last month. The IHS Market data for the Eurozone as a whole are unsurprisingly close to 59, thanks in particular to the German component (60.8). On the other side of the Atlantic, the ISM Manufacturing PMI clearly exceeded expectations, coming out at 60.9, the highest since October 2018.

In the immediate future, currency traders have just taken note of the indicator of the day, namely the consumer price index in the Euro Zone for last month. On an annualised basis and on the broadest basis, prices have increased by a stable 0.8% according to the latest EuroStat figures.

Right now, the pair is trading at $1.2020.

KEY CHART ELEMENTS
Here are the technical elements we proposed on Friday on the Euro Dollar currency pair.

"The very large high wick (high shadow) of Thursday's daily candle on the currency pair seriously compromises the look of the almost completed weekly candle. Continued selling pressure on Friday, in an environment of rising volatility, argues for a continued pullback towards the 100-day moving average (in orange), a trend line that is still bullish, but will be a key test".

We are currently in the long moving average test phase. Its possible break would open up new bearish targets towards levels not seen since 25 November.

MEDIUM-TERM FORECAST
In view of the key graphical factors we have mentioned, our opinion is negative over the medium term on the pair.

Our entry point is $1.2019. Our target price for our bearish scenario is $1.1876. In order to preserve the capital employed, we advise you to position a protective stop at $1.2051.

The expected return on this forex strategy is 143 pips and the risk of loss is 32 pips.

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