EUR/USD: Eurozone inflation is confirmed, the pair finds short-term balance

In the short term, after a very volatile start to the week, buying and selling forces tended to find a balance. The underlying bias remained bearish, below a 100-day moving average (in orange) in full bearish acceleration. In the absence of strong macroeconomic benchmarks yesterday, traders continued to digest the very disappointing U.S. manufacturing figures for September.

The Federal Reserve's report on US industry, released on Monday for last month, sharply disappointed, missing expectations for both the production momentum itself (-1.3%) and the capacity utilization rate (75.1%). The Fed provided the following details: motor vehicle and parts production fell 7.2%, as semiconductor shortages continued to hamper operations, while air conditioning equipment production declined, after a warmer-than-usual August; mining production fell 2.2%. The lingering effects of Hurricane Ida accounted for much of the decline in mining in September; it also contributed 0.3 percentage points to the decline in industrial production.

In addition, the dollar was hurt by the uncertainty surrounding the next Fed Chairman. If J. Powell keeps the advantage for his own succession next February, for a new term, the choice of the executive is not decided. The forced departures of Rosengren and Kaplan, criticized for their own investment activities, had already made a mess of the mandate.

Yesterday, there was not much in the way of statistics. However, housing starts and building permits missed expectations for the month of September.

Inflation in the Eurozone was flat, with the annual rate of price increases confirmed at +3.5% and +2.0% in volatile-adjusted data.

Right now, the pair is trading at $1.1638.

KEY CHART ELEMENTS

With the 20-day moving average (in dark blue) having been breached again, in a high volatility level, 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

Based on 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 pair is positioned between support at $1.1530 and resistance at $1.1674.