EUR/USD: a contrarian entry point is in place

The euro, at the bottom of a bearish channel against the dollar, remained under pressure as of right now (midday), and recorded its lowest level since 5 November. The single currency is clearly suffering from the blatant delay in the progress of the vaccination campaigns. The comparison between the two sides of the Atlantic is in favour of the US, where Biden has doubled his already ambitious target of 100 million injections at the end of his first 100 days in office. By extension, it is the expectation of a stronger and faster recovery in the US that is supporting the greenback.

Faced with problems of vaccine deliveries at the heart of a heated dispute between Brussels and London, the EU said on Thursday that it was ready to block AstraZeneca's exports, during a virtual summit which was also attended by US President Joe Biden. France's Macron also said that Europe will have to "improve" and "complete" its economic and budgetary response to the health crisis so that the recovery is "more vigorous" and does not diverge too much from that of the US.

The three largest economies in the Eurozone (Germany, Italy, France) have over the past few weeks gradually put in place regional and partial containment measures.

The S&P CS house price index (20 representative urban areas) in the US at 15:00 and the Conference Board consumer confidence index at 16:00 are the main things to watch today. It is expected to rise significantly near 97 points. It generally causes significant shifts in the spot market, in line with its deviation from the consensus.

Right now, the pair is trading at $1.1736.

KEY CHART ELEMENTS
The EUR/USD has made an early exit from the bottom of a wedge, a chart shape that is itself part of a broad bearish channel (black dotted line on the chart below). As the spot is about to make contact with the lower bound of this channel, a short-term bullish contrarian scenario is taking shape. The target is the upper bound. The message delivered is bearish within the channel and bullish in the form of a challenge reaction within the channel.

MEDIUM TERM FORECAST
Given the key chart factors we have mentioned, our medium-term view is positive on the EUR/USD.

Our entry point is $1.1740. Our bullish scenario price target is $1.1963. To preserve the capital invested, we advise you to place a protective stop at $1.1694.

The expected return on this strategy is 223 pips and the risk of loss is 46 pips.