EUR/USD: industry and FED governance penalise the USD

The euro rebounded significantly against the dollar, which was doubly penalised by disappointing figures on US industry and by a little less certainty on the succession of J. Powell as head of the Fed.

The federal report on US industry, published yesterday by the Fed for the month of September, disappointed, missing expectations for both the production dynamics itself (-1.2%) and the production capacity utilisation rate (75.1%). The Fed provided the following details: motor vehicle and parts production fell by 7.1%, as semiconductor shortages continued to hamper operations, while air conditioning equipment production declined, after a warmer than usual August; mining production fell by 2.2%. The lingering effects of Hurricane Ida accounted for much of the decline in mining in September and also contributed 0.3 percentage points to the fall in industrial production.

As for the head of the Fed, while J. Powell remains the natural candidate and favourite for his own succession, the question is not yet decided. The forced departures of Rosengren and Kaplan, who were criticised for their own investment activities, had already caused a disturbance in the mandate.

Next on the statistics front, US housing starts and building permits at 14:30.

Right now, the pair is trading at $1.1649.

KEY CHART ELEMENTS
With the 20-day moving average (in dark blue) having been breached again, in a high level of volatility, we are momentarily unlocking our bearish targets ($1.1486 and $1.1360), and will wait for a break below this dynamic technical level to work the spot down again.

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

We will maintain this neutral view as long as the EUR/USD is positioned between support at $1.1486 and resistance at $1.1674.