EUR/USD: a thick fog remains for the pair

The euro regained some momentum against the USD yesterday. For a clear return of risk appetite, to the benefit of the single currency, traders need visibility on the evolution of the pandemic, which has forced some European countries to take harsh new measures of restriction, even lockdowns (such as in Wales).

In the shorter term, they need to know where they stand on the "stimulus package" (additional budget to support US households and businesses). However, the deadline mentioned by Nancy Pelosi, leader of the Democrats and Speaker of the House of Representatives, has passed, and nothing concrete is on the table less than a week before the verdict of the upcoming presidential election.

The polls are leaning towards a Biden White House victory, but history shows that it is not with polls that one wins the right to occupy the Oval Office.

On the purely political question, Alexandre Baradez (IG) warns: "Even if Joe Biden is still well ahead of Trump, there was a small tightening of the percentages last week and this weekend. This is not the most likely hypothesis, but if this movement were to strengthen in the coming days, the markets could once again "prick" the scenario of a tight vote with the risk of contesting the result and therefore more volatility in the outcome".

Anxiety in the forex persists, and is also measured by the degree of uncertainty about the evolution of the pandemic, and the strength of the global economic recovery, the search for a vaccine for the virus.

In the immediate future, in the statistical chapter, there was little to get one's teeth into on Tuesday except for the producer price index in Germany for last month, whose dynamic monthly rhythm (+0.4%) clearly beat the target, benefiting the single currency, against a Dollar without any major benchmark. 

As of right now, the EUR/USD pair is trading at $1.1864.

KEY CHART ELEMENTS
Beware of the bulltrap, in a background configuration that has fundamentally not changed. The graphical and technical situation on the pair is quite clear, but without any invitation to take a position. Namely, the EUR/USD is at equilibrium on a technical pivot zone ($1.1745/$1.1750) from which only a significant move away in a short time would give directionality. A figure in shoulder, head and shoulder was broken by the base as early as 22 September, but without confirmation after the pullback of the 29th. We retain our neutral opinion for the immediate future.

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

We will maintain this neutral view as long as the EUR/USD price is positioned between support at $1.1745 and resistance at $1.1900.