EUR/USD: the yoyo game continues...

While a nervous yo-yo game is engaged on the main equity markets in the Eurozone (Paris, Frankfurt), the translation is less engaged from the point of view of forex volatility, but similar in its form. Forex traders are facing opposing forces: on the one hand, the hope of a faster and stronger than expected recovery on both sides of the Atlantic, and on the other, the more than legitimate fears related to the spread of the virus.

Yesterday morning's European statistical figures came out contrasting, with clear disappointments (German industrial orders in May, Sentix consumer confidence index) and satisfaction (momentum of retail sales recovery in the Eurozone). The latter jumped by 18.0% month-on-month in May, well above expectations. On the other side of the Atlantic, the services activity indicator (ISM non-manufacturing PMI) exploded to 56.9, well above the consensus (49). Last month, the indicator stood at 45.5.

In Europe, the Bank of France said on Sunday that the French economy seemed to be rebounding at least as fast and maybe even faster than initially expected. Christine Lagarde was also optimistic this weekend, saying that while the economic crisis caused by thevirus will "profoundly change" the global economy, towards more ecology and digitalisation, Europe is in an "excellent position" to take advantage of this change.

Concern about the virus remains particularly strong on the American continent (United States, Brazil), in India, and more recently in Australia. The situation appears less critical on the old continent, where some countries are nevertheless forced to take new local containment measures (Portugal, Poland, Germany, Spain).

To be followed by the new job offers (JOLTS) in the United States at 16:00. Disappointment this morning for the two main statistical figures in the Eurozone: German industrial production in May rose by only 8.0% after a monthly collapse of 17.4% in April; and the French trade balance saw its monthly (May) deficit widen to -6.9 billion euros, more than the consensus had suggested.

Right now, the pair is trading at around $1.1279.

MEDIUM-TERM FORECAST
In view of the key chart factors we have mentioned, our opinion is neutral in the medium term on the pair.

We will maintain this neutral view as long as the EUR/USD is positioned between support at $1.1109 and resistance at $1.1439.