EUR/USD: The pair reflects questions regarding interest rates

The signals from yesterday's decline in iconic technology stocks are relatively clear. Traders are wondering about the timing of a tightening of the Fed's monetary policy, even though J. Powell was very reassuring on this point at the end of the last meeting of his Monetary Policy Committee. Ms J Yellen, now Treasury Secretary, said in the run-up to an online event that a small increase in federal rates might be "necessary" to avoid "overheating" in a recovering economy.

In this context, the US employment figures, published today, tomorrow and especially on Friday, will support expectations. Especially since the health of employment, combined with the dynamics of inflation, is an essential element in the Fed's thinking.

And there will be many benchmarks on the employment front over the next two sessions. The main statistical events on the agenda this week are the weekly unemployment benefit registrations on Thursday and the federal NFP (Non Farm Payroll) report on US employment in the private sector for last month.

The ADP survey, which is traditionally closely followed in the trading rooms - because it is reliable - will set the tone. The consensus is greedy, at more than 869,000 jobs created in the private sector (excluding agriculture).

In the immediate future, traders have just taken note of the final data from the PMI Services barometers, two days after the industrial component. For the month of April, the PMI for the Eurozone as a whole came out slightly above the latest estimates, at 50.6 points, returning to a zone above 50 points, abandoned since last September. As a reminder, a score above 50 points is the manifestation, by construction, of an expansion of the sector considered.

"The April PMI data for the euro zone signals the possibility of an exit from the double-dip recession currently experienced by the region in the second quarter of 2021", says Chris Williamson, Chief Business Economist at IHS Markit.

Right now, the pair is trading at $1.2003.

KEY CHART ELEMENTS

The crossing of the upper limit of a former bearish channel is now fully validated, by the increase in volatility in particular on Friday, April 23, and by the consecutive crossing, in the wake, without any form of hesitation, of the 100-day moving average (in orange). However, a neutral opinion is proposed in the absence of a quality entry point. The marubozu drawn on Friday can be used as a framework to define a future lateralisation phase.

MEDIUM-TERM FORECAST

Given the key chart factors we have mentioned, our medium-term view on the Euro Dollar (EURUSD) is neutral.

We will maintain this neutral view as long as the EURUSD is positioned between support at $1.1964 and resistance at $1.2100.