EUR/USD: the euro weakens further, below the symbolic $1 level

Under the weight of an energy crisis threatening to plunge the Eurozone into recession, and against the backdrop of fears of a tougher tone from J. Powell in Jackson Hole at the end of the week, the euro fully validated the breakdown of perfect parity against the dollar. The European currency, one of the most reliable barometers of risk appetite on the financial markets, returned to levels not seen since 2002, the year it was introduced.

The single currency was particularly shaken by the announcement on Friday that Gazprom would halt gas deliveries via the Nord Stream 1 pipeline from 31 August to 2 September, the Russian group citing maintenance requirements. This announcement had propelled gas prices, which continue to rise.

In Jackson Hole on Thursday, the world's leading money managers will discuss the difficulties of the job... To fight inflation without penalising economic activity too much. Initially, currency traders will try to refine their forecasts for a federal rate hike for the September deadline (+50 or +75 bp). The 75 bp option is the most popular for the time being, and would only increase the difference in "remuneration" in favour of the dollar, whose characteristics as a safe haven are fully expressed.

"In the US, the minutes of the recent Fed meeting showed that Fed members were considering a slowdown in monetary tightening at some stage, even if rates have to remain at levels that hold back the economy for some time," notes César Perez Ruiz, Chief Investment Officer and CIO at Pictet Wealth Management. "These statements surprised the markets, while Fed officials had been displaying an aggressive tone for some time."

Right now, the pair is trading at $0.9954.

KEY CHART ELEMENTS
Below the 50-day moving average (in orange), a major dynamic resistance, the underlying trend is undergoing a further development, with the now validated break of the perfect parity (1 dollar per Euro), a highly psychological threshold. The opinion remains negative below this threshold, while waiting for signs of a technical rebound to appear.

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 $0.9930. Our bearish scenario price target is $0.9701. In order to preserve the capital invested, we advise you to set a protective stop at $1.0001.

The expected return on this forex strategy is 229 pips and the risk of loss is 71 pips.