EUR/USD: what's new with the pair?

While "the ECB is slowly coming to terms with a less accommodative market" in the words of Sebastien Galy, Senior Macro Strategist at Nordea AM, the Fed has already largely prepared the markets for several federal rate hikes this year. At least 4, including perhaps a "double" (i.e. +50 bps) as of the March deadline.

For the record, the currency pair benefited last week from a slightly more hawkish tone from Christine Lagarde, with a final gain of more than 300 pips over the week as a whole, gains that were largely made at the end of the ECB's Governing Council.

"In the future, the main challenge for the ECB will be to tighten financial conditions in a way that does not harm the economy too much," says Caesar Ruiz, Head of Investments and CIO at Pictet Wealth Management, who expects "two interest rate hikes by the ECB of 25 bps in 2023".

In recent stats, Germany's monthly trade surplus for December, at +€6.7 billion, missed expectations.

Right now, the pair is trading at $1.1437.

KEY CHART ELEMENTS
For the first time since 16 June (when it was on a sharp break), the spot has touched its 100-day moving average (in orange), which is still a very significant downtrend line. Forex traders will continue to adopt a patient stance, waiting for a satisfactory entry point, as the consolidation that began at the end of November takes a very broad form.

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

We will maintain this neutral view as long as the pair is positioned between support at $1.1360 and resistance at $1.1460.