EUR/USD: Short positions are cut

Although the EUR/USD stabilised after the publication of PCE prices, the Fed's favorite measure in its inflation assessment on Friday, the bearish bias regained its rights at the very beginning of the week with the final data from the indicators. industrial activity in the Euro Zone. It is particularly the German component that challenges, coming out below the first estimates, at 40.5, the lowest since June 2020.

"It appears that the (capital intensive) manufacturing sector is taking the brunt of the ECB's interest rate hikes with increasing difficulty, as evidenced in particular by the first decline in employment recorded since January 2021 and the one of the strongest declines in purchasing activity since the start of the survey", says Dr. Cyrus de la Rubia, Chief Economist at Hamburg Commercial Bank.

"On the demand side, it was in Germany (followed by Italy and France) that companies reported the weakest new order entries at the end of the second quarter," he adds.

Currency traders will follow an equivalent industrial activity barometer (PMI ISM manufacturing) at 16:00 p.m.

Last week, a flurry of relatively good indicators, including the Conference Board's consumer confidence and the PCE index, the US Federal Reserve's (Fed) preferred gauge for measuring inflation, has fueled investor optimism recently. The euro, one of the reference barometers of risk appetite, mechanically resisted.

Right now, the EUR/USD is trading at $1.0911.

KEY GRAPHIC ELEMENTS

The EUR/USD now sees its 20-day moving average (in dark blue) cut upwards against its 50-day counterpart (in orange), which requires us, according to the established trading plan, to cut our positions short, waiting for suitable signals. Neutral advice offered.

MEDIUM TERM FORECAST

In view of the key graphic factors that we have mentioned, our opinion is neutral in the medium term on the EUR/USD.

We will maintain this neutral opinion as long as the EUR/USD parity prices are positioned between support at $1.0784 and resistance at $1.1000.