EUR/USD: Central banks are pushing the pair downward

KEY CHART ELEMENTS

After Chris Wallace declared that the US central bank should not rush into rate cuts, it is the turn of Rob Holzmann, for the ECB to play the role of hawk by announcing that there was a possibility that the ECB will not lower its rates this year. This intervention penalises the euro which was already under downward pressure since the comments of the chief economist of the ECB, Phil Lane. Today, investors will have to stay close to the screens as numerous macroeconomic information will animate the foreign exchange market. Indeed, we first expect the publication of the inflation index for the euro zone at 11:00 a.m. EU time, then at 14:30. American retail sales followed at 16:30 by a speech from Christine Lagarde. Finally, this evening the Beige Book of the American central bank, the Fed, will be communicated. Technically the euro has therefore failed as expected in recent days below the upper limit of its wide weekly range. We will therefore continue sales towards $1.07. A rebound off $1.10 would constitute a selling opportunity again.

MEDIUM TERM FORECAST

Considering the key graphical factors that we have mentioned, our opinion is negative in the medium term on the EUR/USD.

Our entry point is at $1.0868. The price target for our bearish scenario is at $1.0700. To preserve the invested capital, we advise you to position a protective stop at $1.1158.

The expected profitability of this strategy is 168 pips and the risk of loss is 290 pips.