EUR/USD: the pair strikes a pause

Since the beginning of the year, the dollar has imposed its supremacy over the euro, and the latter was bending. The stimulus plans, the considerable efforts of the FED imposed respect and obviously the American economy was going to operate a rebound of which only it has the secret. The $1.20 level was easily broken, with a return to $1.17 early last month.

Since then, inflation, which had been forgotten for years, has returned to the forefront of the debate. The dollar is losing its superbness and the latest figures on consumer and producer prices are really fuelling not just exchanges of views but real fears. As a result, the dollar is stunted and the 1.2160 level is reinstated without much discussion.

On Tuesday, we were talking about the 1.2700 and then the 1.3500 target. It seems that a small pause is taking place at the moment. We will therefore monitor the fate of the 1.2200. We will only take a position on a real rebound above this threshold knowing that the FED's minutes can provoke violent reactions.

KEY CHART ELEMENTS

The resistance of 1.2100 caused buyers to be wary in the middle of last week, but this was without counting on their determination once they became convinced that fears about inflation could prove to be illusory. The passage of 1.21 is no longer open to discussion and the path to 1.2350 is clearly open. However, there is a small pause at 1.2200. Below that, we must be careful!

FORECAST

Based on the key chart factors we have mentioned, our medium-term view on the pair is positive. We will maintain this positive view as long as the EUR/USD is positioned above the 1.2100 resistance level, which has turned into a support level, and better above the 1.2200 level.