EUR/USD: pair falls below a key resistance level

The euro finished a pullback on Thursday morning (rejection on the chart) on a major technical zone, which has become resistant, at $1.1744/$1.1749, in an environment still as uncertain on the global virus front. Steven Bancel, head of Moderna, told the FT that the vaccine developed by his company will not be ready by early November, the date of the presidential election in the United States. As a reminder, Mr. Trump had repeated on numerous occasions, without necessarily convincing, that a vaccine would be ready before the end of his current term of office...

In the United States and in Europe, "the situation remains more fragile than in China because the virus continues to spread, at various rates, weighing on the confidence of economic players and, more specifically, on the entire service sector (tourism, leisure, culture...)," warns Mr. Auboyneau, associate manager at AMPLEGEST. "The household savings rate has been increasing steadily for several months now, forming an important reservoir of future consumption", adds the manager.

The forex is also living for the time being at the rhythm of the revival and loss of hope in the bitter budgetary negotiations in Congress, just weeks away from the upcoming US presidential election.

Macroeconomic benchmarks have multiplied over the past few days, particularly on the American employment front. Operators have been informed of the results of the survey conducted by the private HR firm ADP, which highlights nearly 749,000 job creations in the private sector (excluding agriculture), i.e. 101,000 above the target. Verdict today (Friday) with the federal employment report, which remains more than ever in the Fed's sights as it adjusts its support for the coming months. 

Forex traders also saw the final data for the quarterly fall in US GDP (Q2) to -30.9%, compared to -31.6% in previous estimates by the Bureau of Economic Analysis. The contraction of crude oil inventories by two million barrels over the past week has brought a slight relief as the financial community was expecting an increase in inventories of one million barrels.

On Wednesday, the dynamics of import prices, but above all retail sales in Germany, the leading economy in the monetary union, were a good surprise. Over the month of August, retail sales, excluding automobiles and fuel, grew at a monthly rate of 3.0%, beating the target by a wide margin, according to the latest DeStatis data. However, the consumer price indices in France and Italy, in preliminary data for last month, both missed the target.

Currently, the eurodollar pair is trading at $1.1723.

KEY CHART ELEMENTS
The break of the $1.1744/$1.1749, which released significant selling energy, is fully validated. A figure comparable to a shoulder, head and shoulder, had then given way. We are now moving towards the end of the formation of a short pullback (chart rejection) towards this threshold, which has become a major resistance. The opinion will remain negative on this currency pair, below the above-mentioned threshold and then below the 20-day moving average (in dark blue) whose bearish trend is strengthening.

MEDIUM-TERM FORECAST
In view of the key chart factors we have mentioned, our opinion remains negative over the medium term on the pair's exchange rate.

Our entry point is $1.1737. Our target price for our bearish scenario is $1.1441. To preserve the capital employed, we advise you to position a protective stop at $1.1771.

The expected return on this forex strategy is 295 pips and the risk of loss is 35 pips.