EUR/USD: pressure on the euro remains in place

The idea remains bearish and the sharp break of the 100-day moving average (in orange), while the Fed was firming up the tone somewhat last week, hinting at raising rates twice in 2023. This reinforces the potential for the dollar to be "rewarded" in the months to come, or more precisely, the gap in the potential reward against the euro. This hawkish message contrasts with the persistence of dovish communication from the ECB.

In fact, Mrs. Lagarde was answering questions from the European Parliament's Committee on Economic and Monetary Affairs early yesterday. And investors were visibly reassured to hear the head of the European monetary authority say that monetary tightening was premature as it would pose a risk to the ongoing economic recovery.

As a reminder, without tightening the screws too much, the Fed Chairman revealed on Wednesday part of his intentions, without however panicking the bond markets. "According to the new Dot plots of the Fed members, the Fed is now counting on a first interest rate hike in 2023, earlier than previously anticipated," said John Plassard of Mirabaud Securities. "Its new projections show that a majority of its 11 top officials now expect at least two quarter-percentage point rate hikes in 2023. Seven members, however, see a first hike in 2022. So this is more hawkish than investors expected. More hawkish (hawk, in investor jargon, as opposed to dove), but with a still clear horizon for investors..."

In terms of statistics, there were no major macroeconomic figures on the agenda yesterday. Today, the priority is to follow the Eurozone investor confidence index at 4pm and the Richmond Fed manufacturing index, also at 16:00 (European time). The programme will become denser throughout the week, with in particular a battery of PMI indicators in Europe tomorrow, as well as inflation and GDP data in the second half of the week.

Right now, the pair is trading at $1.1905.

KEY CHART ELEMENTS
The $1.2000 level has been sharply broken, as has the 100-day moving average (orange), which is currently undergoing a downward slope inflection. Friday's black marubozu* is the perfect chart and technical translation of the market psychology. The idea remains negative below the 20-day moving average (in dark blue).

*This type of candle, characterised by a long body, without any shadow, or almost without shadow, shows a continuous mobilisation of the camp (seller in this case) on the time unit in question.

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

Our entry point is $1.1890. The price target of our bearish scenario is $1.1699. In order to preserve the capital invested, we advise you to set a protective stop at $1.1965.

The expected return on this strategy is 191 pips and the risk of loss is 75 pips.