EUR/USD: the FED accentuates the dollar's decline

The EUR/USD is gradually regaining colour while the dollar remains under pressure. Indeed, the FED could even extend its asset buybacks, according to Monday's comments by its vice-president Clarida. "All available tools will be implemented to support our economy" with probably rates close to O for as long as necessary and at least keep asset buybacks for an extended period of time, if not more intensively.

The consequence is a continuation of the legitimate decline of the USD, and on the other hand it is only an accentuation of the trend of the last few months. A slight stabilisation had taken place when the positive rate for the Pfizer and Biotech vaccine was announced, suggesting a slowdown in this monetary infusion. This is not on the agenda for the moment. The risk is indeed not the inflation that these injections could cause in the long term, but the risk of deflation in the short term.

The pair therefore has no argument to retreat for the moment, even if we sense the relatively limited buying inclination.

KEY CHART ELEMENTS
The pair is not giving promising signals, bullish or bearish, for the time being and will in the coming days come up against a key zone at 1.1871. The current timing is not buying, even if the bullish trend is slowly continuing. For the moment it is better to stay away, even if it could quickly accelerate to its next resistance of 1.1965, not far from the annual highs achieved during this summer at 1.1936.

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

We will maintain this neutral view as long as the pair is positioned between support at $1.1745 and resistance at $1.1872.