EUR/USD: Traders are all ears regarding Powell and Lagarde

Currency traders will have to deal, for each of the remaining days of the stock market week, with three major meetings: the biannual hearing of J Powell, President of the Fed before parliamentarians, tomorrow's outcome of the Board of Governors of the Fed, and the NFP report on US employment on Friday.

J Powell should reaffirm his cautious attitude regarding the timetable for rate cuts, justifying his delay by the quality of economic fundamentals, the high cost of rents and the tensions on employment which weigh on the trajectory of inflation. If no surprises are to be expected, it is always interesting to rely on the language used by the Chairman of the Fed, to refine the probabilities of a drop in Fed Funds yields in June. According to the CME's FedWatch tool, these are at 69%.

On the ECB Governing Council which will end tomorrow, Francois Rimeu, senior strategist at La Francaise AM thinks that "the ECB should try to gain time regarding its future decisions on lowering interest rates."

"At the press conference, Christine Lagarde will likely keep a moderate tone and reaffirm the ECB's firm commitment to bringing inflation back towards its 2% target. The economy is more resilient and inflation is falling more slowly than which was initially planned a few weeks ago. Therefore, a change in monetary policy stance is less urgent. The ECB still has time and can wait until June. We do not anticipate any notable movements financial markets following the ECB meeting."

The resilience of underlying inflation, as well as the difficulties encountered by the German economy, the most powerful in the Eurozone, will inevitably be discussed.

The NFP (Non Farm Payrolls) report, a federal report on American private employment (excluding agriculture), will be published Friday at 14:30 (EU time). After more than 345,000 positions created in January in the private sector (excluding agriculture), the consensus does not exceed 200,000 for the month of February. The Fed will be sensitive to any confirmation of tensions on private employment, after confirmation, by the PCEs last week, that the return to the inflation target is not a linear path. As a preview, currency traders will be able to read the results of the survey by the private human resources firm ADP at 14:15.

Right now, the EUR/USD is trading at $1.0876.

KEY CHART ELEMENTS
The 20-day moving average (in dark blue), which until now conveniently served us as a trailing stop, has been clearly exceeded. We therefore no longer offer short positions, and remain on the lookout for a new attractive entry point. If the spot were to break its 20-day moving average in a significant level of volatility, we could then speak of a false exit since 20 February. This dynamic level is to be monitored, therefore.

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 $1.0810  and resistance at $1.0940.