EUR/USD: the euro - a reliable barometer of risk appetite

The EUR/USD continued to suffer from an atmosphere that was not very conducive to risk-taking on the financial markets, in a geopolitical context that was tense to say the least, and while the expected number of rate cuts in 2024, on both sides of the Atlantic, moreover, has fallen, particularly since the publication of worrying American inflation figures.

"After the employment report two weeks ago, the publication of the American inflation report for the month of March also came out beyond expectations. It thus probably seals the hopes of the most dovish on the number of rate cuts to expect from the Fed, the market now only anticipating two by the end of the year (compared to 7 in December)", says Thomas Giudici, head of the bond management of Auris Gestion.

Remember that after 9 days of rising tension, Iran launched a massive attack using drones and missiles against Israel on the night of 13 April to 14 April. The international community is trying to coordinate its diplomatic efforts to encourage de-escalation and avoid conflagration in the Middle East. Wall Street, which opened slightly higher on Monday, finally ended in bright red. And the main stock markets of the monetary union (Milan, Paris, Frankfurt) are currently in decline.

In terms of statistics on Monday, American household spending increased by 0.8% over one month compared to February, where analysts were counting on a more contained increase, of 0.3% still on a monthly basis. Before reading the monthly report on American industry at 15:15 (EU time), currency traders are dealing with the sharply rising publication, beyond expectations of the ZEW index of confidence in the German economy.

"The recovery of the global economy strengthens expectations for Germany, with half of those surveyed expecting a recovery in the country's economy over the next six months. The significantly improved assessments of the situation and expectations economic growth in German export destinations also contributes to this increased optimism. This is reflected in particular in the expected appreciation of the US dollar against the euro", comments ZEW President Professor Achim Wambach on the results. investigation.

Right now, the EUR/USD is trading at $1.0641.

KEY CHART ELEMENTS
The 20-day moving average (in dark blue) has just fallen below the 50-day moving average (in orange), itself in a bearish inflection phase. The succession, in three days, of two candles with elongated red bodies (April 10 and 12), shows a change in the psychological state of the market with regard to the single currency in the short term.

MEDIUM TERM FORECAST
Considering the key graphical factors 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 $1.0693.