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#1 06-04-2021 13:35:39

johnedward
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From: Paris - France
Registered: 21-12-2009
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EUR/USD: confirmed resumption of support at the bottom of the channel

EUR/USD: confirmed resumption of support at the bottom of the channel


The single currency regained some traction after resuming support at the bottom of the bearish channel against the dollar, with the support of encouraging signs on vaccine logistics in Europe, suggesting the beginning of a catch-up with the vaccine campaign, already in progress in the Americas. Risk appetite in the equity markets on both sides of the Atlantic, with the very good reception given to the presentation of the US infrastructure investment plan by Biden, is momentarily working in favor of the euro.

This plan, with an envelope of $2 trillion over 7 years, without any major surprise as to the package, would be financed in part by an increase in the corporate tax. It must be said that the envelope is rather in the lower part of what was expected. In any case, the plan is ambitious, "historic" according to Biden, who detailed investments not seen in more than half a century, notably in roads, railways, the replacement of lead pipes, the transition to green energy, notably in public service mobility services.

According to John Plassard (Mirabaud), "Biden's infrastructure plan holds all its promises and could be adopted before the end of the year. Its financing (through very large tax increases) should, however, make many people in the Republican camp cringe."

On the statistical front, the spotlight was on U.S. employment late last week, particularly with Friday's NFP report, a federal report on the health of private employment (excluding agriculture) in March. The number of jobs created exploded expectations, at 916,000, compared to 468,000 in February. As for the unemployment rate, it fell to 6%, in line with expectations. On Thursday, the focus was on the encouraging figures published in the morning by IHS Markit on manufacturing activity in Germany and France in March.

In the immediate term, the Eurozone's unemployment rate remained stable at 8.3% of the active population, where the median consensus was for a drop to 8.1%. On the other hand, the Sentix index of confidence in the economy surged to 13.1, the highest since August 2018, beating the target by a wide margin.

Right now, the pair is trading at $1.1814.

KEY CHART ELEMENTS

On a remarkable combination of Japanese candlesticks (March 30 and 31, then April 1), the spot resumed support on the lower limit of a bearish channel, with confirmation by amplification of variation yesterday, on a daily candle with a very elongated body. This buying reaction is likely to develop towards the upper limit of the technical corridor mentioned. Positive opinion in the immediate future.

MEDIUM-TERM FORECAST

Given the key chart factors we have mentioned, our medium-term view is positive on the pair.

Our entry point is $1.1804. The price target of our bullish scenario is $1.1999. In order to preserve the capital invested, we advise you to position a protective stop at $1.1726.

The expected return on this forex strategy is 195 pips and the risk of loss is 78 pips.

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