EUR/USD: the ascending pattern is not validated

The combination of candles in ascending methods will not have been validated finally, with the fifth and last candle showing a significant high wick (Wednesday). The flat consolidation is the new scenario, as risk appetite is contracting in other risk asset classes (equities, oil), notably due to concerns raised by Wednesday's disappointing US domestic consumption indicator. The monthly retail sales, excluding automobiles, corrected, (-1% versus -0.5% expected) on the month of December.

"Since the beginning of the last quarter, the trend has reversed on retail sales. The indicator is below its trend showing a loss of momentum in consumer spending," says Philippe Waechter, head of Economic Research at Ostrum AM. "The decline in purchasing power, reduced income dynamics and higher interest rates on bank cards are penalising US households," adds the asset management executive.

In addition, according to Reuters, the central banker said that inflation in the eurozone was far too high and that the institution would keep raising rates to bring inflation down to 2% within a reasonable timeframe. These words were perceived as restrictive by the market. Following Christine Lagarde's statements, the yield on the German 10-year bond rose, and is currently up 0.02 points at 2.045%.

On the macroeconomic side, the weekly unemployment figures for the US fell back below the psychological 200,000 mark, revealing strong and persistent tensions on employment, which in turn are generating inflation.

Right now, the pair is trading at $1.0804.

KEY CHART ELEMENTS
In the absence of validation of a bottom-up pattern, a continuation of neutral, thin range oscillations near the 20-day moving average (in dark blue) is expected.

MEDIUM-TERM FORECAST
Based on 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 $1.0645 and resistance at $1.0855.