EUR/USD: All eyes are on a first rate decrease

All is calm on the pair, in a waiting position between two remarkable moving averages before the publication, tomorrow, of a report on private employment in the US which will be closely followed. Indeed, this NFP (Non Farm Payrolls), if it were to confirm the trend towards a lull on the employment front in November, would encourage the Fed to deliver a less muscular speech on 13 December at the end of its last FOMC of the year.

So far anyway, the signs are encouraging this week, with the new job postings and the ADP survey both showing signs of easing tensions. Before the NFP tomorrow (14:30 EU time), currency traders will focus this Thursday on weekly registrations for unemployment benefits and job cuts (Challenger).

On the European side, "bets" on an anticipated rate cut are strengthening, particularly since the recent "exit" of Isabel Schnabel, a member of the ECB Executive Board who is nevertheless considered a hawk (an intransigent central banker in the fight against inflation to summarize). She told Reuters that with inflation falling a further hike in the central bank's key rates was now "rather unlikely".

As a reminder, currency traders learned last week of the first estimates of consumer prices for the month of November in the Eurozone. And surprise, the dynamic of slowing inflation is even greater than expected. Excluding food, energy, alcohol and tobacco (elements considered volatile), prices increased at an annualised rate of 3.7% in November, compared to a target of 4% and a month of October of 4.1%! A very significant slowdown which should bring a little flexibility to the ECB's monetary policy.

"The larger-than-expected drop in inflation in November means it is becoming increasingly untenable for "European Central Bank (ECB) members" to pretend they are not even considering cutting rates", explains Capital Economics. "We now expect a first drop for next June, rather than for September," adds the think tank. All products combined, inflation is reduced to 2.4% according to this first estimate from EuroStat. The next publication covering all data for November 2023 is scheduled for 19 December.

Today at 13:30 (EU time) the job cuts (Challenger) and at 14:30 the weekly registrations for unemployment benefits.

Right now, the EUR/USD is trading at $1.0769.

KEY CHART ELEMENTS
After a bullish runaway characterized by the school marubozu candle on 14 November, followed by a very short consolidation and an early bullish extension, a technical adjustment is underway, an adjustment catalysed by the statistical publications of Thursday, November 30. The view is neutral in close proximity to the 20-day moving average (dark blue). A small "contrarian" type buying movement is however possible in the very short term, without there being any risk of exploiting it.

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 $1.0693 and resistance at $1.1012.