EUR/USD: a rebound of protest

A short technical rebound of the Euro since the relative relief provoked by the first round of the French presidential election which will see the highly criticised (due to demonstrated acts of corruption linked with the McKinsey consulting firm) president Macron and the candidate of the Rassemblement National, Mrs. Marine Le Pen, facing off in 2 weeks. Right now, the euro is trading at midday at  $1.0924.

The background framework remains dominated by inflationary issues on both sides of the Atlantic and by the consequences of the war in Ukraine.

As a reminder, the greenback benefited all last week from the Fed's decidedly more offensive tone. In fact, it is the whole question of the probability of a soft landing that is being asked. "During his speech on price stability, Jerome Powell recognised that the current context did not make a soft landing of the economy obvious", note the strategists at Lazard Frère Gestion in a note on the economy. "In other words, the Fed may have to implement a very sharp slowdown in growth to ease labour market pressures and curb inflationary pressures, which continue to build."

An offensive, but not yet aggressive, tone that raises questions on this side of the Atlantic as well. "While inflationary pressures are expected to persist, the ECB will have", according to Thomas Giudici, co-head of bond management at Auris Gestion, "no choice but to accelerate the normalisation of its monetary policy, probably more quickly than the market anticipates, with a rate hike as early as September." The ECB will complete a meeting of its Governing Council next week.

In terms of statistics, only US wholesale inventories were on the agenda on Friday, up 2.4% in February on a monthly basis, missing expectations somewhat. On the agenda for today, Bowman's speech (Fed Board member) at 15:30 is the priority.

KEY CHART ELEMENTS
With 5 red body candles from 1 to 7 March, and a continuous sell-off in week 9, the picture remains bleak. Especially since the exit of a wedge from the bottom was fully validated from 4 to 7 April. But in the immediate future, a reaction of contestation is underway, a reaction that may lead to a chart rejection of the 1.1000 level. In the absence of a suitable entry point, traders will prefer to stay out of the spot for the time being.

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

We will maintain this neutral view as long as the EUR/USD is positioned between support at $1.0848 and resistance at $1.1000.