EUR/USD: antagonistic forces are at work

Two opposing forces were at work in the heart of the week on the pair: On the one hand, the tone of the Fed's "Minutes", a little less "aggressive" than anticipated without, however, upsetting the monetary matrix, and on the other hand, the difficulty of regaining risk appetite in the ultra tense geopolitical context between NATO and Moscow, the former demanding formal proof from the latter of a massive withdrawal of Russian troops from the Ukrainian border, thereby refusing to talk about de-escalation. The result was heavy pressure on both components of the currency pair.

Currency traders turned their attention to US consumption on Wednesday, the sacrosanct consumption that constitutes the main engine of national wealth creation across the Atlantic. The subject is all the more sensitive as the latest publications from the University of Michigan on US consumer morale showed a real weakness on this front. The score of 61.8 for this month, in preliminary data, is a low point since 2011. For this reason, traders are anxious to see the "real" consumer figures. Retail sales for January jumped by 3.9% on a monthly basis, well above expectations...

Furthermore, the federal report on industry in January largely beat expectations, both in terms of production dynamics (+1.3%) and the capacity utilisation rate (77.7%).

Right now, the pair is trading at $1.1374.

KEY CHART ELEMENTS
For the first time since 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. The very broad consolidation has taken shape below $1.1460, which is a level of graphic resistance. The field is immediately open towards the lower bound of this very wide range, towards $1.1115. However, traders will avoid taking positions in the immediate future in the absence of a satisfactory entry point.

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 EUR/USD is positioned between support at $1.1260 and resistance at $1.1460.