EUR/USD: the US dollar maintains its grip on things

In a market environment less conducive to short-term risk taking, the Euro continued to be under pressure against the dollar, near $1.1720 per euro. The macro week, which started off badly with figures showing slowing recovery momentum in China, continued on Tuesday in a cool mood, to say the least, with US retail sales.

According to the latest federal data, these sales, at their broadest base, fell at a monthly rate of 1%, completely missing expectations. The consensus was -0.2% and the previous month (June) showed a monthly increase of 0.7%.

At the same time, the dollar continues to adopt a bullish bias against the euro in anticipation of an increase in its "potential" earnings on the markets. On this point, the Fed's return to work is being scrutinised. Boston Fed President Eric Rosengren has made the start of a reduction in the monthly asset purchase program conditional on a second consecutive month of very good employment data. As a reminder, the last NFP report (July) came out at enthusiastic levels, well above expectations.

Right now the pair is trading at $1.1702.

KEY CHART ELEMENTS

The 20-day moving average (in dark blue), which we mentioned in the preamble, is indeed exerting a pressure force, which is calming the few ardors at the end of the protest reaction. The general idea remains bearish and traders will be able to initiate "short" positions on the EUR/USD by locking in a target at $1.1485.

MEDIUM TERM FORECAST

Based on the key chart factors we have mentioned, our medium-term view on the pair is negative.

Our entry point is $1.1715. The price target of our bearish scenario is $1.1487. In order to preserve the capital invested, we advise you to position a protective stop at $1.1777.

The expected return on this forex strategy is 228 pips and the risk of loss is 62 pips.