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#1 23-06-2022 09:04:47

johnedward
Admin & Trader
From: Paris - France
Registered: 21-12-2009
Posts: 3292
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EUR/USD: Uncertaintly ahead of today's PMI numbers

EUR/USD: Uncertaintly ahead of today's PMI numbers


The euro remains under pressure against the dollar, even though the rebound of the main equity indices in France and Germany has been prematurely exhausted.

And this at a time when "households are anticipating increasingly sustainable inflation", as noted by analysts at Lazard Frères Gestion. As a reminder, the Fed raised the Fed Funds 7 rate by 5 points just a week ago. William Gerlach, Country Manager France at international payments player iBanFirst, notes that this is "the biggest increase since 1994". "This reflects a sense of panic within the central bank as inflation gets dangerously close to the symbolic 10% threshold (which [iBanFirst] expects to be reached within a few months)."

On Tuesday, there was very little in the way of statistics, apart from the US housing sales figures for May, which came out almost perfectly in line with expectations, at 5,410,000 units. Today, the agenda gets denser with a volley of activity indicators (IHS PMI flash data for June) and weekly jobless claims.

Right now, the pair is trading at $1.0507.

KEY CHART ELEMENTS
The failure to touch the 50-day moving average (in orange) is now in place, and bearish targets towards $1.0350 and $1.0250 are locked in. A close on the weekly lows in week 23 reinforced the bearish message. Further contact with the aforementioned trendline would further strengthen the quality of the entry point.

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

Our entry point is $1.0525. The price target of our bearish scenario is $1.0251. In order to preserve the capital invested, we advise you to place a protective stop at $1.0607.

The expected return on this forex strategy is 274 pips and the risk of loss is 82 pips.

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