EUR/USD: today's focus is on the PMI composite and OPEP+

Although stabilising under the effect of protesting forces, the euro remains poorly poised against the dollar, generally speaking, since the change of tone of the Fed at the end of its last FOMC. The monthly employment report, published on Friday, did not change the situation.

The NFP report came out mixed, with no real message clearly delivered to the Fed to feed its monetary thinking. On the one hand, the unemployment rate, which was expected to fall to 5.5% of the active population, actually rose to 6.0% (from 5.8% in May), while the number of jobs created in the private sector (excluding agriculture) clearly beat expectations, with 855,000 jobs created. The growth of average hourly wages remains within expectations (+0.2%), without any overheating that could lead to fears of inflationary slippage. This is what the Fed, and through it the financial community, is looking for in this type of report: the degree of imbalance between supply and demand on employment in the middle of a recovery, wage increases and their potential impact on prices.

In the immediate term, the euro is finding an intermediate support point with the publication of the final PMI (IHS Markit) Services (and henceforth Composite) data for the Eurozone. At the scale of the monetary union, the score is 58.4 for services (above the first estimates) and the Composite reaches 59.6.

Chris Williamson, Chief Business Economist at IHS Markit, says:
"A wave of optimism that the worst of the pandemic is behind us has propelled business growth expectations to a 20-year high, boding well for the recovery to strengthen in the months ahead. However, in part due to the shortage of labor supply - which means greater pricing power - the recent rise in inflationary pressures is by no means limited to the manufacturing sector. Service sector companies are raising prices at the fastest pace in more than 15 years as costs rise, accompanying a similar jump in manufacturing prices to signal a widespread increase in inflationary pressures."

No benchmark to expect from Wall Street, closed the day after a holiday (Fourth of July National Day, falling on a Sunday this year). The OPEC+ negotiations, on the other hand, will be the hot spot for risk assets.

Right now, the pair is trading at $1.1872.

KEY CHART ELEMENTS

The $1.2000 level has been ruthlessly broken, as has the 100-day moving average (in 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). Note that the slope of the long moving average mentioned above is in the midst of affirming and validating its bearish inflection.

After a challenging reaction from June 21-23, the spot quickly turned around, tracing three long high shadows in a row.

A fragile guardrail is nonetheless taking shape around $1.1848.

*This type of candle, characterized by a long body, with no shadow, or almost no shadow, shows a continued mobilization of the side (seller in this case) on the time unit in question.

MEDIUM TERM FORECAST

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

Our entry point is $1.1876. The price target of our bearish scenario is $1.1699. In order to preserve the capital invested, we advise you to position a protective stop at $1.1936.

The expected return on this Forex strategy is 177 pips and the risk of loss is 60 pips.