EUR/USD: the pair is starting to consolidate

We're seeing a bit of a decline in the EUR, which is legitimately taking time to breathe, as are European stocks, and as the main references for crude oil prices. The entry in consolidation is almost validated, on a spot which retains 8 consecutive candles with green bodies and an ascent with linear slope since the crossing of the upper limit of a range at $1.1000.

Forex traders are rallying around several unifying ideas: the hope for a quick economic recovery with the confirmation of the reopening of the Eurozone's main economic powers, and the feeling of unwavering support from the ECB, which today completes another meeting of its Governing Council.

Eric Bourguignon, member of the Executive Board of Swiss Life AM France, anticipates, like many other market players, a "strengthening of its PEPP, a securities purchase programme designed to deal with the disastrous economic consequences of the virus situation".

"We do not rule out the possibility that the institution headed by Christine Lagard may also extend the list of securities eligible for its purchase programme to include certain speculative bonds, which would make it possible to support the companies most affected by the virus situation. Finally, it could commit to reinvesting the securities in its portfolio that reach maturity in equivalent securities in order to improve the visibility of credit market players".

Yesterday, forex traders saw the final data for the PMI Services Activity Indicator in the Euro-Zone rise to 30.4 and Europe's unemployment rate rose to 7.4% of the working population, against much more pessimistic expectations of 8.3%. Note that these are April's figures, the second month in which the containment measures were implemented in Europe's main countries (Germany, France, Italy, Spain). Eurostat puts the unemployment rate at 7.2% at the end of March.

At midday today, the EUR was trading at around $1.1238.

MEDIUM-TERM FORECAST

In view of the key chart factors we have mentioned, our opinion is neutral in the medium term on the eurodollar's price.

We will maintain this neutral view as long as the eurodollar is positioned between support at $1.1110 and resistance at $1.1440.