EUR/USD: New catalysts coming soon

The Euro, against the USD, refocused around its 20 and 50 day moving averages, in a wait-and-see position, like the dominant sentiment on risk assets at the start of the week. Forex traders are awaiting the publication this Tuesday in the United States of orders for durable goods and the consumer confidence index. The second revision of GDP in the fourth quarter will be published on Thursday, the PCE index on Friday.

Concerning American growth, "there is almost no doubt that the GDP of the United States will continue to expand during the first half of 2024. We also estimate that American activity should grow in 2024 at a rate close to its potential, in other words in a range between 1.8% and 2.0%", for Mabrouk Chetouane, Head of Global Market Strategy at Natixis Investment Managers.

The EUR/USD was upset last week, subject to opposing forces. On the one hand, the willingness of the major central banks to begin their cycle of rate cuts this year puts pressure on the single currency, whose "remuneration", dynamic against the Dollar, risks diminishing. Indeed, and this would be a historic first, the European Central Bank could get ahead of its American counterpart, the Fed, in starting to loosen the monetary tap. On the other hand, the risk appetite still palpable on the markets favors the single currency against the safe haven Dollar.

Right now, the EUR/USD is trading at $1.0840.

KEY CHART ELEMENTS
Consistent with our previous papers, we build a bullish position, which we maintain as long as the 20-day moving average (in dark blue) gravitates above the 50-day moving average (in orange). The difference between these two curves is small.

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

Our entry point is at $1.0851. The price target for our bullish scenario is $1.1143. To preserve the invested capital, we advise you to position a protective stop at $1.0692.

The expected profitability of this forex strategy is 292 pips and the risk of loss is 159 pips.