EUR/USD: moving towards a larger formation of consolidation

Slightly less nervousness on the forex than about the main equity markets on either side of the Atlantic, and the main barrel benchmarks. The euro continued to build a consolidation phase around 1.1349, while the USD continued to suffer the repercussions of the Fed's latest economic forecasts, in a market that has stopped hiding problems linked to the progress of the Covid-19 epidemicvirus in the United States and to a possible second wave of contamination in a country that has early on put in place measures to break out of the lockdown.

As a reminder, the Fed did "the essentials" in the middle of the week, reaffirming its total support for the economy, whatever the cost, while recalling that the recovery will be a "long road". But without managing to further fuel the appetite for risk. The monetary institution headed by Powell presented its new outlook for the US economy. Over this year, a fall in GDP of 6.4% is considered, with a powerful rebound next year (+4.9%). As for unemployment, it is forecasted at 9.2% by the end of 2020.

On the virus front, which has been much less in the headlines in recent weeks, the global situation is far from being stabilised. The counter has resumed in Brazil, following an injunction from the Supreme Court, and shows a continued acceleration, while there are worrying outbreaks in the United States: many states are experiencing an outbreak of new cases, in some cases at record levels (Arizona, North Carolina, etc.), and Dr Fauci pointed out that the virus situation is far from over.

As of now, the pair is trading at $1.1308.

THE CHARTS

After crossing the upper bound of a range without any hesitation at the end of May, on the basis of accelerated volatility and subsequent upward extension, the EUR/USD released a significant potential for buying energy, until it returned almost to its early March highs. For the time being, a breathing phase, in the form of a consolidation phase currently being defined, is expected.

MEDIUM-TERM FORECAST

In view of the above, our opinion is neutral in the medium term on the eurodollar pair.

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