EUR/USD: the pair drifts below parity once again

The EUR/USD is back below perfect parity.

This sheds new light on the latest FOMC meeting. The different readings that can be made of it are indeed far from binary, and the components of the equation are becoming more complex. César Ruiz, Head of Investments and CIO at Pictet Wealth Management notes that J Powell "hinted that the final Fed Funds rate - estimated at 4.7% in the central bank's dotted path - could be revised upwards (the market currently anticipates a final rate close to 5.1% in mid-2023)."

"The rate hike process could therefore be slower, but also longer, while aiming higher," says the asset management decision maker.

Right now, the EUR/USD is trading at $0.9953.

KEY CHART ELEMENTS
After two false exits above the 1:1 level, the spot has drawn a double top marking resistance near 1.01. A re-entry into the $1 area, if confirmed by a break of the 50-day moving average (in orange), would further reinforce the bearish technical message being delivered.

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 $0.9938. Our bearish scenario price target is $0.9666. In order to preserve the capital invested, we advise you to set a protective stop at $1.0101.

The expected return on this forex strategy is 272 pips and the risk of loss is 163 pips.