EUR/USD: The ZEW, GDP, and ECB's governor's council the focus of this week

The Euro/Dollar currency pair is tending to balance out in the short term following the release of the confusing August monthly US employment report.

The NFP (Non Farm Payrolls) report was a statistical focal point at the end of last week and it did indeed have its share of surprises. This monthly federal report highlights two things:

First, a stronger than expected increase in average hourly wages (+0.5% month over month), probably due to the tension in entire sectors of the economy (construction, restaurants). Also, a completely missed target for job creation in the private sector, which "produced" only 240,000 jobs, excluding the agricultural sector, against an optimistic consensus of 715,000. As a reminder, in July, the US economy created almost 1 million jobs. As for the unemployment rate, it has continued to fall, reaching 5.1% of the active population. In the end, these figures are half and half, which will not feed the mill of the most "doves" nor the most "hawks" of the Federal Reserve.

According to John Plassard, Mirabaud's strategist, those who were betting on the start of a tapering at the Fed's September 21/22 meeting will have to change their minds. "However, the beginning of a reduction in asset purchases in November is still on the table," the specialist believes, pointing out that low-wage employees (in the service sector) have still not returned to the labour market for the time being, but should start to do so when the special government aid for employment expires soon. As a result, the September and October employment numbers are likely to be at the high end of expectations ("thanks to" the end of special government aid and back to school), he believes "but it may take a while for the consensus to digest and understand why there was such a discrepancy between expectations and today's actual number..."

The week for traders will be marked by important statistics (Sentix, German ZEW, GDP in the Eurozone), but above all by the outcome on Thursday of a new meeting of the European Central Bank (ECB) Governing Council. While the language will naturally be watched, "few surprises are expected, while the ECB should wait for a change in the Fed before changing its own monetary policy," according to Vincent Bay, market analyst at IG France.

Right now, the pair is trading at $1.1862.

KEY CHART ELEMENTS
The technical rebound that began on 20 August, whose potential may not yet be completely exhausted, does not change the downward trend of the spot. It even increases the interest of the bearish entry point. 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.

Only a clear breach of the 100-day moving average (in orange) would validate a reversal in behaviour.

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 $1.1866. 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 $1.1952.

The expected return on this strategy is 379 pips and the risk of loss is 86 pips.