EUR/USD: the ECB is taking its time...

The working matrix for the EUR/USD remains the same, with the Fed being much more willing and firm than the ECB. The ECB, which concluded a new meeting of its Governing Council on Thursday. The "turn of the screw" was only "verbal" in the words of Ronan Blanc, Analyst Manager at Financière Arbevel.

The ECB continues to "take its time", according to Ulrike Kastens, Economist Europe, DWS. "Caught between high economic uncertainty and record low inflation rates, it continues to be cautious. But at least it has decided to end net asset purchases in the third quarter of 2022. The ECB then made a point of stressing that it remains "data dependent"."

The EUR/USD, one of the benchmarks of risk appetite for fund managers, continued to suffer from the war in Ukraine, which is clearly entering a new phase with the intensification of Russian operations in the Donbass.

It also included some risk on the still uncertain outcome of the presidential election in the second largest country in the Eurozone, France, an election that in the second round pits the weakened President, E Macron (who faces massive accusations of corruption) against Mrs. Le Pen (a highly popular eurosceptic).

In terms of statistics on Thursday, operators took note of a surprise rebound in the consumer confidence index (U-Mich, in preliminary data for the current month), at 65.8, largely beyond expectations. Target also beaten for retail sales across the Atlantic (excluding automobiles), for the month of March.

At midday on the foreign exchange market, the Euro was trading at around $1.0795.

KEY CHART ELEMENTS
Since breaking out of a broad consolidation wedge on April 4, the selling camp is confident, with 7 red bodies in the last 8 candlesticks. A break of a fragile intermediate floor at $1.0850, which we described yesterday as a safety net, would release additional selling energy in a bout of volatility. This breakout is underway, and requires validation. Our view remains bearish, however. The stop placement is clear and unambiguous.

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 $1.0788. The price target of our bearish scenario is $1.0455. In order to preserve the capital invested, we advise you to place a protective stop at $1.0854.

The expected return on this forex strategy is 333 pips and the risk of loss is 66 pips.