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#1 29-01-2021 09:35:14

johnedward
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From: Paris - France
Registered: 21-12-2009
Posts: 3068
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EUR/USD: appetite for risk is dampening

EUR/USD: appetite for risk is dampening


The Euro remained in trouble below its 20-day moving average (in dark blue) against the Dollar, the day after a FOMC whose lukewarm words cooled the mood and thus dampened risk appetite.

As widely anticipated, the Fed left its federal key rates unchanged in a band between 0 and 0.25%, stating that the pace of economic recovery would depend on the development of the pandemic and the deployment of the vaccination campaign. The new tenant of the White House, J. Biden, promised 100 million doses injected in the first 100 days of his term.

J Plassard (Mirabaud) summed up: "By stating that the economic outlook remained highly uncertain and passing the baton (for the time being at least) to the new Biden government and its new recovery plan, Jerome Powell disappointed investors by adopting a "wait and see" approach. Forward guidance has not worked as it should...

The S&P 500 lost 2.57% at Wednesday's close.

In the statistical chapter on Wednesday, it is the orders for durable goods that were published, and which send contrasting signals depending on the base studied. In the "core" sense, i.e. adjusted for transport equipment, orders for durable goods rose by 0.7% in December 2020 at a monthly rate.

A very dense macroeconomic programme on the American side is to be followed, culminating in the very first GDP estimates for the fourth quarter, without doubt the indicator with the strongest impact in the event of a significant deviation from the consensus. But also the weekly unemployment benefit registrations, the balance of trade in goods, wholesalers' inventories and new home sales.

At midday on the foreign exchange market, the Euro was trading at around $1.2110.

KEY GRAPHICAL ELEMENTS
The now validated break in the 20-day moving average (in dark blue) changes the technical framework that prevailed until then. After more than two months of uninterrupted firm growth, the time is ripe for a downturn under the aforementioned short-term trend curve, which has now sharply reduced its downward slope. Last weekend, we specified two technically identifiable support points that will arise if the $1,2115 and $1,2000 continue to fall. The first of these has been erased on a bout of volatility, which leads us to anticipate a break in the second (still in progress), and therefore to readjust the target, aiming for a broader bearish objective. Negative opinion as long as the spot is below its 20-day moving average (in dark blue). Trend curve which offers the advantage, in this case, of identifying a clear trailing stop. The EURUSD currency pair just completes the trailing stop of a slightly engaging wedge at the contact of this trend line.

MEDIUM TERM FORECAST
In view of the key graphical factors we have mentioned, our opinion is negative over the medium term on the Euro Dollar (EURUSD) exchange rate.

Our entry point is $1.2106. Our target price for our bearish scenario is $1.1876. In order to preserve the capital employed, we advise you to position a protective stop at $1.2181.

The expected return on this Forex strategy is 230 pips and the risk of loss is 75 pips.

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