EUR/USD: testing of the long moving average continues

The euro was timidly gaining support on its 50-day moving average (in orange), whose support role has been tested since the beginning of the week, against the backdrop of intense questioning of the Fed's intentions after the publication late last week of an NFP report on employment which highlighted powerful tensions on the employment front. As a reminder, private employment added over 490K jobs last month, against a backdrop of contraction in available labour - unemployment is bottoming out at 3.3% of the job force.

"And while we were expecting a more incisive Fed chairman [...] in front of the Economic Club of Washington after the Friday job figures, he once again relatively reassured market players by indicating that the Fed wanted to be transparent in order "not to surprise the markets"," says Alex Baradez (IG France). "And the markets seem to have once again stopped at the softer parts of the speech whereas both speeches (last Wednesday and last night) were rather 'hawkish' in their overall content."

For the time being, the mood is serene, as evidenced by the appreciated decline in 10-year Treasuries, near 1.6%.

Right now, the pair is trading at $1.0740.

KEY CHART ELEMENTS
The bullish bias is not threatened at this stage. Simply, the spot is falling back, towards its long moving average, with no tangible sign of a buying entry point. Neutral opinion retained. Only a sharp break of the 50-day moving average, with confirmation at the end of the week, would send a consistent negative message. This major technical test is underway.

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 $1.1045.