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#1 23-02-2023 15:59:36

johnedward
Admin & Trader
From: Paris - France
Registered: 21-12-2009
Posts: 3597
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EUR/USD: the crossing of the moving average lines is imminent

EUR/USD: the crossing of the moving average lines is imminent


https://www.forex-central.net/forum/userimages/EUR-USD.jpg


The day after the publication of the Fed Minutes without any particular flavor, the Euro continued to slide against the Dollar, under its 50-day moving average (orange), itself under the threat of its 20-day counterpart (dark blue).

This report of the last monetary policy meeting of the powerful monetary institution headed by J Powell is in line with expectations, namely those of a balanced balance of power between hawkish and dovish, a confirmation of the will to fight against chronic inflation. While being aware that in the meantime, between the FOMC and the publication of the Minutes, many publications showing a warming of the American economic machine have multiplied, particularly on employment.

Yesterday, the IFO business climate index in Germany came out at 91, up very slightly, perfectly within the target (the consensus). In the meantime, traders were able to see the final data on inflation in the Euro Zone at +8.7% annualized for the month of January, in line with expectations. Excluding food, energy, alcohol and tobacco, prices rose slightly more than expected, at +5.4%.

Right now, the EUR/USD is trading at $1.0592.

KEY CHART ELEMENTS
After gradual weakening from February 6 to 14, the 50-day moving average (in orange) finally broke down. This underlying trend line is now under threat from its 20-day counterpart (in dark blue). The sell signal would then gain in intensity if necessary. The crossings of these two remarkable moving averages have indeed been giving excellent signals for positioning and trade follow-up for many months.

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

Our entry point is $1.0607. The price target of our bearish scenario is at $1.0239. In order to preserve the capital invested, we advise you to position a protective stop at $1.0751.

The expected return on this Forex strategy is 368 pips and the risk of loss is 144 pips.

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