EUR/USD: US holiday + the pair is digesting US inflation data

Against the backdrop of confirmed risk appetite at the start of this year, the euro is consolidating against the USD, close to $1.0820, capitalising on the sense of relief provoked last week by a confirmed and significant slowdown in price increases in the US.

As a reminder, the US broad-based consumer price index came in right on target at +6.4% annualised.

"In the US, inflation data and wage trends reinforce the assumption of a Fed rate hike limited to 25 basis points in February," says Jeanne Asseraf-Bitton of BFT Investment Managers. "SMEs confirm that monetary tightening is starting to bite, showing less labour shortage and a marked easing in prices."

The confirmation is that price inflation is slowing markedly in the US, although there is still a long way to go before inflation lands. The fight, through firm monetary policy, will clearly have to continue.

Note that Wall Street is closed today (Monday), due to a public holiday: Commemoration of the birth of Martin Luther King. Click here to view all trading holidays.

There are no major macroeconomic figures on the agenda today. It will become denser tomorrow with the German ZEW and the NY Fed's manufacturing index (Empire State index).

Right now the EUR/USD is trading at $1.0821.

KEY CHART ELEMENTS
The break of the 20-day moving average (in dark blue), which until now had served as a perfectly materialized trailing stop, requires us to cut our long positions, while waiting for a relevant entry point. However, no pronounced bearish reversal pattern has been identified. On the other hand, only a breach of $1.0750 in a high volatility range would validate a bullish extension at this stage. This crossing is effective in value, but without volatility. Furthermore, the RSI/price divergence is a concern at this stage. Neutral opinion reiterated under these conditions.

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 EUR/USD is positioned between support at $1.0435 and resistance at $1.0855.