EUR/USD: A decrease in US rates in September is highly likely

The EUR/USD continued to retrace part of its losses, amid hopes of a soft landing scenario for the American economy. Hope maintained by a series of recent macroeconomic statistics, at the forefront of which is the ISM Services, which came out well below the 50 mark, at 48.9 while this activity barometer was expected at 52.5. On the other hand, weekly registrations came out in line with expectations, at 237,000 new units. But this was not the only statistic on employment since the ADP firm released its monthly copy, with 149,000 job creations in the private sector, which means a cooling of the employment machine... Enough to bring some water to the mill of J Powell, who had been reassuring the day before, during a speech at the Sintra forum.

The tone of the Minutes published yesterday is in the same direction. The Minutes, as a reminder, are a document which compiles chronologically - hence their name - of the debates which animated the last meeting of the Fed Monetary Policy Committee (FOMC). Enough to significantly increase the probability of a reduction in federal rates at the end of the September FOMC, to more than 71% according to the CME Group's FedWatch tool. A figure which should move little this Thursday, while Wall Street is closed due to a public holiday (4th of July, Independence Day), and which could oscillate again in the light of the results of the NFP report (No Farm Payrolls), federal report on private employment which will be released tomorrow. The unemployment rate is expected to be stable at 3.9% of the active population, and job creation in the private non-agricultural sector is falling, below the 199,000 mark, to 195,000. This last indicator, and especially its deviation from the target, will be scrutinized.

On the European side, according to Eurostat earlier in the week, in the sense of retail prices, in the euro zone, inflation certainly slowed down in June, standing at 2.4% over one year compared to 2.7% in May. But "core" inflation, excluding food and energy prices (and alcohol and tobacco) increased by 3%, more than the 2.8% expected by economists polled by Reuters. And this while the most influential central bankers on the planet are gathered for the annual Forum organized by the European Central Bank in Sintra, Portugal.

According to Deutsche Bank, Christine Lagarde declared that the ECB was still facing several uncertainties in its fight against inflation, particularly in terms of the evolution of wages, productivity and profits. The ECB president also added that the institution would need time to collect enough data to be sure that the risks of inflation above its target were eliminated.

Right now, the EUR/USD is trading at $1.0799.

KEY CHART ELEMENTS
In high volatility, the EUR/USD has regained the upper part of a bearish oblique line, providing a short-term supply of oxygen. The technical signals are immediately contradictory and do not allow for a calm position to be taken. In all cases, we are suspending our sales lines.

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 $1.0664 and resistance at $1.0885.