EUR/USD: the pair is neutral right now...

With the yield on US 10-year Treasuries falling back to 1.67%, forces were more balanced today in the EUR/USD, with the spot stagnating in the middle of a bearish channel in the wake of the unsurprising release of the Minutes.

The minutes reflected the fact that its members believe that they are still far from the targets, in terms of employment and inflation. The Minutes were expected after the IMF raised its growth projections, raising fears of an "out-of-sync" recovery, itself accentuated by an increase in US rates. The divergence in recovery dynamics between the US and Europe, but also between the emerging US, will be a market issue in the coming months. The prospects for a rapid recovery are taking shape for the United States, in particular thanks to the massive success of the vaccine campaign against SARS-Cov2, the virus responsible for Covid-19, which has caused the death of over 500,000 Americans to date.

Chris Williams, Chief Business Economist at IHS Markit, offered the following insights: "The latest survey data suggest that the eurozone economy has weathered the effects of recent containment measures much better than many had anticipated. The social distancing measures and travel restrictions also appear to have had a much more limited impact on service sector activity than was observed at the same time last year. This resilience in the economy suggests not only that businesses and their customers are looking to the future with some optimism, but also that they have gradually learned to cope with the virus."

This morning, Eurostat published the producer price index for the eurozone, slightly below expectations, at +0.5% for the month of February in monthly rate. They had jumped by 1.6% in January. In annual comparison, from February 2020 to February 2021, these prices, which are a barometer of inflation among others, rose by 1.5%.

Right now, the pair is trading at $1.1892.

KEY CHART ELEMENTS

On a remarkable combination of Japanese candlesticks (March 30 and 31, then April 1), the spot resumed support on the lower limit of a bearish channel, with confirmation by amplification of variation on April 5 and 6, on daily candles with very long bodies. This buying reaction of contestation stalled (doji). The cursor is switched to neutral in the absence of clear signals, while keeping in mind that the bearish channel still makes sense technically.

MEDIUM-TERM FORECAST

Based on the key chart factors we have mentioned, our medium-term view on the pair is neutral.

We will maintain this neutral view as long as the EUR/USD is positioned between support at $1.1745 and resistance at $1.1875.