EUR/USD: a context that's not condusive to risk appetite

At first reassured by the possibility of a summit between J. Biden and V. Putin, the markets took a nosedive on Monday morning, as Moscow finally deemed the organisation of such a meeting "premature". The result was renewed pressure on assets that measure risk appetite, with the notable exception of crude oil, whose prices remain firm in anticipation of the consequences of potential economic sanctions. In the immediate term, forces were tending to balance out in the absence of US benchmarks, with Monday being a holiday on Wall Street (commemoration of George Washington's birth, President's Day).

Traders are therefore feverishly looking to the very first estimates of activity indicators (PMI by IHS Markit) for services and industry. While the figures are rather close to expectations for industry, the score for services (55.8) comes out well above expectations.

Chris Williamson, Chief Business Economist at IHS Markit, commented on the latest Flash PMI figures: "The Eurozone economy picked up in February, as an easing of health restrictions helped demand for many consumer services - including travel, tourism and leisure - rebound and helped ease supply difficulties. With businesses anticipating a wider reopening of the economy in the months ahead, the outlook for business activity also improved over the month, and the pace of job creation strengthened."

Right now, the pair is trading at $1.1337.

KEY CHART ELEMENTS
For the first time since June 16 (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 EUR/USD 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 $1.1360.