EUR/USD: the euro sinks amidst a climate of uncertainty

The ruro, one of the reference barometers of risk appetite on the financial markets, lost more than a hundred pips against the dollar since Putin's announcement of military action in Ukraine. While denying the term "occupation", Russia is bombing strategic and military targets, not only in the east of the country, but throughout Ukraine. The EU, and in particular its leading economic power, is largely dependent on Russian natural gas for its supplies, hence the fear, of seeing the energy bill rise even higher...

This act of war reshuffles the cards and will push the United States, and more globally the members of NATO, and the European Union, to strengthen their economic and political sanctions against Russia. As a reminder, Chancellor Scholz has already decided to freeze the approval procedure for Nord Stream (gas pipeline linking Germany to Russia via the Baltic).

In terms of recent stats, the various consumer price indices for January came out at +2.4% in the Eurozone, at an annualised rate, excluding volatile elements (food, energy, alcohol and tobacco).

Right now, the pair is trading at $1.1108.

KEY CHART ELEMENTS
The transition phase between February 4 and 23, in the form of a non-federating slide below the 100-day moving average (in orange), is over. The bearish bias is aligning with the short term, and the one candle pattern today, at this stage at least, in black school marubozu, illustrates the firm grip of the selling camp. We are revising our bearish targets to $1.10, and then if necessary to $1.0856

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 $1.1175. Our bearish scenario price target is $1.0857. In order to preserve the capital invested, we advise you to place a protective stop at $1.1261.

The expected return on this forex strategy is 318 pips and the risk of loss is 86 pips.