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#1 03-06-2021 15:07:15

johnedward
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From: Paris - France
Registered: 21-12-2009
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EUR/USD: in a tight range ahead of the Friday jobs numbers

EUR/USD: in a tight range ahead of the Friday jobs numbers


The EUR/USD pair remained close to balance, with traders now awaiting major US employment benchmarks in a matter of hours.

In the meantime, the US economy is expected to continue to grow. This is highly anticipated as the Fed will be accurately gauging the degree of economic heating up through the prism of the imbalance between supply and demand in the usage market. The question of the monetary policy normalisation agenda follows directly from this.

"The monthly report on US jobs will be published on Friday and it should give the markets a good indication of the Federal Reserve's tempo to start discussions on a slowdown in asset purchases, the famous "tapering"", says Alex Baradez (IG France).

The Fed's Beige Book, published on Wednesday, is clear on this subject: the powerful monetary institution headed by J. Powell notes a clear improvement in the health of the economy, without hiding the forces of tension exerted on usage (recruitment difficulties) and supply chains.

Wednesday's statistics were not much to go on. The Eurozone producer price index for April slightly exceeded expectations at +0.9% in monthly terms, according to the latest Eurostat report.

In the meantime, currency traders have just taken note of the PMI by IHS services activity barometer in the Eurozone, following the release of the industrial PMI earlier in the week. At 63.0, the Services PMI for the Monetary Union came in above expectations in final data for May. We therefore have very strong composite data, which is particularly encouraging for the coming months.

"Unless there are significant new outbreaks of infection, the gradual lifting of health restrictions should continue at least until the fall, which could facilitate a return to a more favourable business environment as the summer progresses. This prospect of a return to more normality has led to renewed optimism about business growth over the next year, with the latter reaching its highest level for over 16 years," comments Chris Williams, Chief Business Economist at IHS Markit.

"However, capacity constraints in the economy-both in terms of product shortages at suppliers and difficulties in recruiting staff to meet rising demand-are a growing concern, not least because of the very high inflationary pressures they are causing. While inflationary pressures are expected to ease as supply conditions improve, they are likely to persist in the months ahead, particularly if labour shortages are translated into higher wages."

Right now, the pair is trading at $1.2148.

KEY CHART ELEMENTS
The EUR/USD is without a very short-term trend, above a 20-day moving average (in dark blue), a trend line whose role as a support is gradually weakening. A break of this support would cause a release of selling energy, a movement for which we have no precursor signal yet.

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

We will maintain this neutral view as long as the EUR/USD is positioned between support at $1.2043 and resistance at $1.2266.

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