EUR/USD: The FOMC and Governor's Council are on the menu this week

The EUR/USD continues to consolidate with a bullish bias as the Fed and then the ECB will complete their respective first policy meetings of the year this week.

For Thomas Costerg, US economist at Pictet Wealth Management, the Fed will remain very sensitive to labour market data, which still shows some tension. The Fed is particularly watching the JOLTS job vacancy survey. The survey will be released on Wednesday, as will the survey by private firm ADP, on the eve of the release of the monthly federal NFP (Non Farm Payrolls) report, which will be the focus of attention. "The Fed fears persistent wage pressures pushing up inflation this year, especially in services."

"It could continue to raise rates, in 25bp steps, at future meetings to a peak of 5.25% next May, in line with the projections given in December," continues Mr. Costberg.

The powerful US monetary institution will be able to rely on a confirmation, published on the eve of the weekend, of the slowdown in the dynamics of PCE (Personal Consumption Expenditures) prices, its preferred measure of inflation. It is this figure, on an annualised basis, that it "pilots" to reach the 2% target. Unsurprisingly, prices, excluding food and energy, rose by 0.2% in December, in monthly terms. Over a year, this so-called "underlying" inflation slowed to +4.3%.

The Fed concludes its FOMC meeting on Wednesday and the ECB its Governing Council meeting on Thursday.

The statistical agenda, which was very quiet today, will become much denser tomorrow with the preliminary Q4 GDP in the Eurozone, and for the United States: the consumer confidence index (Conference Board), the Chicago PMI index and several barometer indicators of the health of the housing market.

At midday on the foreign exchange market, the Euro was trading at around $1.0872.

KEY CHART ELEMENTS
The uptrend in the Euro currency pair is now well established. We are in a situation where the RSI oscillator is flirting with its "overbought" boundary without ever crossing it. The view will remain positive as long as the closing data of each daily candle is above the 20-day moving average (in dark blue), which has been trending positively since the white marubozu on 3 November.

MEDIUM-TERM FORECAST
Given the key chart factors we have mentioned, our medium-term view is positive on the EUR/USD.

Our entry point is $1.0907. The price target of our bullish scenario is $1.1459. In order to preserve the capital invested, we advise you to position a protective stop at $1.0784.

The expected return on this forex strategy is 552 pips and the risk of loss is 123 pips.