EUR/USD: a bullish bias, below support levels

The euro remained well oriented against the dollar, in the wake of the European equity markets, the appetite for risk being reinforced at the start of 2023 by the positive interpretation, by the market, of the latest US job figures.

The message sent by this NFP (federal monthly report on employment) is however twofold, and ambivalent. Because on the one hand the market is witnessing with relief a deceleration in the rise in average hourly wages (+0.2% monthly), but the unemployment rate, expected to be stable at 3.8% of the active population, is came out sharply down to 3.6%, suggesting that the Fed has not yet gone far enough in the firmness of its monetary policy to cool the economic machine. 222,000 jobs were created in December, in the private sector (excluding agriculture), a figure higher than expected.

Regarding wages, which in this case focused the attention of operators on Friday, "the trend is slowing and could therefore reassure members of the Fed who fear that a tight job market will fuel the cycle of increases in wages and prices" which boosts inflation, explain BNP Paribas analysts quoted by AFP."

"Investors have [...] chosen to see the glass half full on the US employment figures. If the job market remains as solid as ever with sustained creations and even a drop in the unemployment rate, the market has preferred to focus on lowering wage pressures”, says Mr. Giudici.

However, US monetary policy will remain firm for a long time. The opportunity will be clear to judge this Tuesday, with the speech scheduled for the middle of the afternoon, by J. Powell, President of the Fed, on the occasion of a symposium organised by the Bank of Sweden, in Stockholm.

Rigft now, the pair is trading at $1.0714.

KEY GRAPHIC ELEMENTS
The break of the 20-day moving average (in dark blue), which has served us up to now as a perfectly materialized trailing stop, requires cutting long positions, pending a relevant entry point. However, no pronounced bearish reversal pattern has been identified. Conversely, only a crossing into a volatility high of $1.0750 would validate a bullish extension at this stage.

MEDIUM TERM FORECAST
In view of the key graphic factors that we have mentioned, our opinion is neutral in the medium term on the EUR/USD.

We will maintain this neutral opinion as long as the EUR/USD parity prices are positioned between the support at $1.0435 and the resistance at $1.0746.