EUR/USD: a technical support level has just been broken through

The reading of the market atmosphere, cooled by the resurgence of Covid virus cases, particularly in the United States, the targeted and punctual measures to restrict gatherings in France and Belgium, and a lockdown in the United Kingdom that is no longer an option that has been totally ruled out, is clear. It influences all so-called risky assets, such as the euro, oil and equities. In this context, we have witnessed the break of the key $1.1750 level (see below).

Moreover, the approach to the ballot box verdict in the United States is taking an "aggressive" turn, to use the term of John Placard (Mirabaud Securities). And this is happening at a time when Trump is eager to find a successor to the progressive Judge Ginsburg in the Supreme Court.

Regarding the budget debates in Congress, under the watchful eye of the currency traders, Vincent Boy (IG Markets) warns: "We will be watching closely as negotiations continue in Congress, with the aim of reaching an agreement on the budget and thus avoiding another shutdown on 1 October. This risk of a shutdown in state funding could, however, allow Republicans and Democrats to also find a consensus on the new envelope of support for the economy and the American people".

As far as statistics are concerned, there was nothing to be gained from Monday's reports. Of note is the hearing before the Senators, today, of J. Powell, President of the Fed. A President who is walking on eggshells!

As a reminder, last week, the Fed concluded a meeting of the FOMC Monetary Policy Committee, which took a specific tone, since it was the first meeting of this type after the major strategic orientations unveiled at the Jackson Hole symposium. The Monetary Institution headed by Powell decided on a monetary status quo, promising to keep its key rates at the floor until inflation passes the "moderate" status, and for a "certain time", the 1.9% mark.

As of right now, the euro is trading at around $1.1711.

MEDIUM-TERM FORECAST

In view of the key factors we have mentioned, our opinion is negative over the medium term on the eurodollar's exchange rate.