EUR/USD: Parity is entirely dependent on the FED

The dollar should continue to appreciate as the US central bank is much more aggressive than the European central bank in terms of fighting inflation. We should see an example of this tonight. A 0.75% rise is a given but some are talking about a 1% rise. In reality, the real question is whether this "aggressiveness" will continue in the autumn.

So far, traders have not wanted to see an aggression of the parity. However, the ECB has so far been content, even belatedly according to some, to put an end to the negative rate policy. The reactions of the FED are much more lively and an illustration of this should come with the press conference of the FED governor

Given this state of affairs and as long as it lasts, we must avoid remaining in the seller's camp because for essentially psychological reasons parity is not broken. On the other hand, we will have to run to catch the train if the traders pulverise the symbolic support of parity. In the immediate future, the rebound initiated on 11 July seems to be coming to an end.

KEY CHART ELEMENTS
Between a lower than expected "remuneration" potential and the risk of a recession, particularly in view of the weight of German industry, the Euro has seen its rebound, which began when it reached perfect parity, dry up. The entry into a rebalancing phase, not without volatility, was the chosen option. Our neutral opinion remains valid, therefore avoiding taking positions in the immediate future and still awaiting the outcome of the FED meeting.

FORECAST
Based on the key chart factors we have mentioned, our view is neutral on the EUR/USD until tonight. Technically, we will maintain this neutral view as long as the EUR/USD is positioned between support at $1.000 USD and resistance at $1.0274.