EUR/USD: A period of digestion following a threshold break

Calmly, the EUR/USD consolidated above a major technical level, a bearish oblique crossed energetically on 15 May, in the wake of publication of reassuring figures on American inflation.

As a reminder, excluding food and energy, these consumer prices increased in the US in April by 0.3%, moderately therefore, and in line with the target. Over one year, these prices increased by 3.5%, compared to 3.7% the previous month.

Enough to cause an accentuation of the ebb movement on the American 10-year, now back at 4.4, after having touched 4.34. This also brings relief to Fed executives, who have more arguments in their possession to leave the door open to a scenario of two cuts in Fed Funds by the end of the year.

There was also talk of inflation on 17 May, on this side of the Atlantic. Forex traders have digested the final consumer price data in April, for the Eurozone this time, which EuroStat, the statistical office of the European Union, has just published. No deviation to report compared to the first estimates. Excluding food, energy, alcohol and tobacco, prices increased by 2.6% annually. Figures which are stable compared to March.

The forex traders' week is starting very calmly, in the absence of major indicators. A week which will, however, be marked by various speeches, or speeches by monetary officials, in particular Fed executives, whose language elements will undoubtedly be scrutinized. We will have to wait until Wednesday for the calendar to thicken somewhat, with sales of old homes across the Atlantic, but especially Thursday with PMI activity indicators in the Euro Zone and the closely monitored weekly registrations for unemployment benefits.

Right now, the EUR/USD is trading at $1.0867.

KEY CHART ELEMENTS
On large-scale marubozu, the currency pair shattered the technical resistance level constituted by the bearish oblique drawn in black. A recovery is underway, which may ultimately result in a pullback. The conditions in terms of entry point are not met to immediately build a position on the currency pair.

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 $1.0758 and resistance at $1.0885.