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#1 07-04-2021 11:57:26

johnedward
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From: Paris - France
Registered: 21-12-2009
Posts: 3050
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EUR/USD: the pair is now in the middle of the downward channel

EUR/USD: the pair is now in the middle of the downward channel


The euro continued its rebound in the middle of the channel against the dollar, with the support of the morning release of the final data of PMI activity indicators (by IHS Markit) in services. The barometer indicator even approached the 50-point mark (49.6) for synthetic data in the Eurozone, above the target, merging with previous estimates. As a reminder, the 50-point mark separates, by construction, an expansion of activity (above) from a contraction of activity (below).

Chris Williams, Chief Business Economist at IHS Markit, offers the following insights: "The latest survey data suggest that the eurozone economy has weathered the effects of recent containment measures much better than many had anticipated. The social distancing measures and travel restrictions also appear to have had a much more limited impact on service sector activity than was observed at the same time last year. This resilience in the economy suggests not only that businesses and their customers are looking to the future with some optimism, but also that they have gradually learned to cope with the virus."

Combined with hopes of a massive increase in the vaccinatione campaign on this side of the Atlantic over this month, and the decline in US long rates yesterday, this release supports the euro in the short term, whose evolution remains however framed by a bearish channel (see below).

Forex traders will remain attentive to the explosive proposals of Biden and Yellen on taxes, namely for the first to harmonise corporate taxes in all states of the U.S. federation, and for the second to create a global tax.

Todays stats: in the United States, the trade balance at 14:30 (central European time), oil inventories at 16:30, as well as the "Minutes" of the Fed, minutes of the last FOMC meeting, at 20:00.

Right now, the pair is trading at $1.1895.

KEY CHART ELEMENTS

On a remarkable combination of Japanese candlesticks (March 30 and 31, then April 1), the spot resumed support on the lower bound 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 Euro Dollar (EURUSD).

Our entry point is $1.1889. 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 $1.1851.

The expected return on this strategy is 110 pips and the risk of loss is 38 pips.

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