EUR/USD: the long moving average line exudes downward pressure

Between a dollar reinvigorated by the prospect of three or even four federal rate hikes and powerful technical catalysts, the currency pair validated its false bevel exit pattern to resume its underlying bearish bias, which would be invalidated in the event of a clear reconquest of the 100-day moving average (in orange). For the time being, bearish positions can be taken under this underlying trend line.

In terms of recent stats, Friday's news includes retail sales, a sharp marker that has a prominent place on traders' screens, as domestic consumption is THE main driver of national wealth creation in the United States. And these sales, in their monthly dynamics, have strongly disappointed. Excluding automobiles in December, they fell by 2.2%, completely missing the target. The federal industry report also missed expectations, both for December production, which contracted slightly, and for the capacity utilisation rate, which stood at 77%.

Traders took a close look at China's growth data this morning, the main statistical release on Monday. In the fourth quarter, annualised growth was +3.9%, well above expectations. This did not prevent the People's Bank of China from lowering its key rates, in the opposite direction of its main counterparts, to further boost growth.

Note the lack of reference from Wall Street yesterday, a holiday (Martin Luther King's birthday).

Right now, the pair is trading at $1.1389.

KEY CHART ELEMENTS
In our previous analysis of the leading currency pair, we warned of the "risk" of a false exit from the top, of an elongated wedge pattern. Here we are, and the expression of this false breakout has abruptly brought the spot against a 100-day moving average (in orange) with a sharp bearish bias. Traders will be able to gradually resume short positions in the EUR/USD spot by taking advantage of a much better entry point.

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 $1.1418. The price target of our bearish scenario is $1.1217. In order to preserve the capital invested, we advise you to position a protective stop at $1.1502.

The expected return on this forex strategy is 201 pips and the risk of loss is 84 pips.