EUR/USD: perfect parity hit once again, but will it hold?

In a generalised movement of punctual reflux on risky assets, with the approach of major monetary meetings, the euro found perfect parity against the USD. A level already hit in the middle of July. The further heating up of government bond yields across the Atlantic will be watched like milk on the fire as the Jackson Hole symposium, the traditional high mass of the world's leading money makers, approaches. What is at stake is the pace, more or less aggressive, of the increase in federal rates. J. Powell will be speaking on Friday.

For Bruno Cavalier, chief economist at Oddo BHF, the central banker "will probably try not to appear 'dovish'" because "the Fed's anti-inflationary credibility is at stake". "The Fed is on a path of strong and rapid tightening and there is no reason to conclude that its mission has been accomplished, far from it".

James Bullard, president of the St. Louis Fed, told the Wall Street Journal that he favours a 75 basis point rate hike in September. Neel Kashakari, who presides over the Federal Reserve Bank of Minneapolis and is not particularly known for his hawkishness, even supports the scenario of raising key rates to 4% this year and continuing in 2023 towards 4.5%.

In terms of today's stats, we'll see valuable activity barometers in services and industry, via the PMI surveys.

Right now, the EUR/USD is trading at $0.9985.

KEY CHART ELEMENTS
While the spot has melted away sharply towards perfect parity, reaction forces, still difficult to quantify, are already emerging, suggesting a momentary opposition, within a major bearish trend.

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 it's positioned between support at $1.0000 and resistance at $1.0274.