EUR/USD: high(er), for longer

Without progress, in the absence of benchmarks today, the EUR/USD is lateralising, with traders digesting the Thursday speech considered restrictive by Powell, and the publication, tomorrow, of a valuable index allowing to measure the effectiveness at this stage of US monetary policy: monthly consumer prices.

Thursday evening, Powell put an end to the procrastination on so-called "terminal" rates, namely whether or not a peak on Fed Funds has already been reached. The Fed president clarified that his members were not convinced that key rates were high enough to fight inflation.

?The Fed is committed to implementing a sufficiently restrictive monetary policy to bring inflation down to 2% over time,? said Powell, who said he was not convinced ?of having reached such a position.?

As for the ECB, its president declared on Friday that the drop in rates was "not something that will happen in the coming quarters", but added that maintaining key rates "should be enough to control inflation.?

?The money market expects that the Federal Reserve and the European Central Bank will lower their rates for the first time next June,? notes Chris Dembik, investment strategy advisor at Pictet AM, who has a very different point of view. "It's likely that key rates will remain at their current level for longer than expected, in particular because inflation is unlikely to return to the 2% target over the next year and because growth, even if it slows, will remain honorable. We estimate that GDP could grow by 1% in developed economies and by 2.2% globally in 2024."

Wednesday's session will also be decisive, with a battery of major American indicators led by the producer price index, the Empire State index and retail sales, among other celebrations.

Right now, the EUR/USD is trading at $1.0671.

KEY GRAPHIC ELEMENTS
The 20-day moving average (in dark blue) is in phase, at a significant angle, to reconquer the 50-day long moving average (in orange), even though these two trend lines have not met since 17 August. The bearish message is therefore no longer so clear. The neutral opinion will be kept immediately.

MEDIUM TERM FORECAST
Considering the key graphical 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 EUR/USD prices are positioned between support at $1.0550 and resistance at $1.0792.