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#1 22-11-2021 17:04:21

johnedward
Admin & Trader
From: Paris - France
Registered: 21-12-2009
Posts: 3176
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EUR/USD: a 5th virus wave looms over the euro

EUR/USD: a 5th virus wave looms over the euro


A persistent bearish bias weighs on the euro against the USD, the spot being under pressure from the prospects of new restrictive measures in Europe to fight against the coronavirus. This is already the case in Austria, which today applied the generalised lockdown decided last week. The tone is particularly hardened in Germany, where the Minister of Health, Jens Spahn, who last week did not hesitate to resort to containment decisions, went much further in the language. He summed up the health situation in his country in 1 phrase: Germans will be "vaccinated, cured or dead" by the end of the winter because of the current outbreak of infections in the country, which no longer rules out mandatory vaccines.

Also on the menu this week, on the monetary policy side, traders will follow the nomination process of the next Fed Chairman, the reappointment of J. Powell not being assured. "President Joe Biden's choice should be either current Chairman Jerome Powell or Lael Brainard who is currently Fed Governor. The latter is considered a dove and his appointment could support the markets again in the short term," says Vincent Bay (IG France).

In terms of Friday's stats, German "producer" prices soared to +3.9% in monthly terms (month-on-month), literally exploding the consensus. There were no major US figures on the agenda on Friday. As a reminder, on Thursday, the Philly Fed Manufacturing Index came out to a surprisingly strong 38.9, beating the target by a wide margin. On the other hand, the weekly jobless claims figures were slightly disappointing. They had the advantage of not putting more pressure on the Fed.

Right now, the pair is trading at $1.1260.

KEY CHART ELEMENTS

As a reminder, on Wednesday we stated the following: "A break of a fragile support zone at 1.1530 would increase volatility. The working band between $1.1530 and $1.1675 would then be obsolete." This zone has given way, with validation from volatility. This has strengthened the selling current. Next bearish target locked at $1.1150. And this without excluding the possibility of a pullback to $1.1530.

Following this, a sharp reaction of protest will be considered.

MEDIUM-TERM FORECAST

Given the key chart factors we have mentioned, our medium-term view on the EUR/USD is negative.

Our entry point is $1.1284. The price target of our bearish scenario is $1.1151. In order to preserve the capital invested, we advise you to position a protective stop at $1.1331.

The expected return on this strategy is 133 pips and the risk of loss is 47 pips.

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