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#1 07-06-2021 09:52:12

johnedward
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From: Paris - France
Registered: 21-12-2009
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EUR/USD: the balance is tipping in favour of the dollar

EUR/USD: the balance is tipping in favour of the dollar


The dollar gained a few pips last Thursday against the euro on expectations of a widening "pay" gap between the greenback and the single currency after the release of very good US employment figures, a potential first step towards a change in tone by the Fed.

In terms of weekly jobless claims, for the previous week as a whole, the Labour Department counted 390,000 new claims, the lowest since the start of the "Covid" crisis. The private HR firm ADP's survey found private sector job creation to be close to one million, at 990,000, compared to a target of 650,000.

"Private sector payrolls have shown a marked improvement over recent months and the largest gain since the early days of the recovery," says Nell Richards, chief economist at ADP. "Wages are well above the monthly average of the last few months. Businesses of all sizes have seen increased usage growth, reflecting the improving nature of the pandemic and the economy."

To be complete on the economic statistics front, the ISM Services index came out on Thursday at 63.9, well above expectations, even though it was already greedy. Traders also took note in the morning of the PMI by IHS Markit in services in the Eurozone, following the publication earlier in the week of the industrial PMI. 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 summer.

Just released, the retail sales momentum for April (-2.9%, missing the target by more than two times), is not expected to provide support for the single currency.

Right now, the pair is trading at $1.2158.

KEY CHART ELEMENTS
The EUR/USD broke through on Thursday, in significant volatility, the 20-day moving average (in dark blue), a trend line that has been alternating precisely since 4 November, the roles of support and resistance. The cursor has switched to the red position, with a first short target on the spot near $1.1965.

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

Our entry point is $1.2116. Our bearish scenario price target is $1.1965. In order to preserve the capital invested, we advise you to place a protective stop at $1.2177.

The expected return on this Forex strategy is 151 pips and the risk of loss is 61 pips.

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