EUR/USD: Orange light

If the decision, in the middle of last week to not totally pause the process of raising federal rates will have allowed the USD to raise its head a little, the haemorrhage on the EUR is momentarily stopped, with the support of a statistical publication in Germany, and reassuring messages from various authorities on the banks.

Christine Lagarde, addressing the European Union leaders at their summit on Friday, (re)affirmed the resilience and solidity of the banking system. In the US, the Treasury and the Fed, in unison, also made comments that were considered reassuring. "The Treasury, the Fed and the political powers want to reassure on the current banking crisis, but the data of the American FED, show strong tensions on the system. Indeed, after a year of balance sheet reduction by the Fed, leading to a reduction of 649 billion, the balance sheet has grown again by nearly 399 billion in just a few weeks. At this rate, the QT (quantitative tightening) started last March will be completely erased at the beginning of April", says Vincent Boy (IG) in a recent note.

The IFO business climate index in Germany rose this morning to 93.4, above expectations. This is the fourth consecutive increase. "This positive development was mainly driven by business projections; companies also assessed their current business activities as somewhat better. Despite turbulence at some international banks, the German economy is stabilising," reads the statement accompanying the raw data.

Right now, the EUR/USD is trading at $1.0829.

KEY CHART ELEMENTS
Around a 50-day moving average (in orange), which is becoming horizontal, the technical messages delivered are progressively dual, without one side or the other unifying. The opinion is therefore neutral on the leading currency pair pending a concordant set of clear chart and technical clues.

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 $1.0550 and resistance at $1.0875.