EUR/USD: Antagonistic forces are at work

The EUR/USD regained balance, after the relative relief caused by the results of the second rounds of the legislative elections, and with the approach of the biannual hearing of J Powell, President of the Fed, before Parliamentarians.

According to the final data provided by the Ministry of the Interior, the Alliance of the New Popular Front comes first with 182 seats, "Ensemble" cushions its fall with 169 seats, and the National Rally, although significantly increasing its contingent of deputies, only comes in third position, with 144 seats.

If the risk of an absolute majority National Rally, for a time feared by the market for petty reasons, everything is still to be built. Negotiations between political camps will begin, with the next step being the formation of a government.

"The risk premium on the euro seems to have already partly faded and we do not expect a surge in the EUR/USD due to the absence of a clear majority" says Claudia Panseri, CIO of UBS Wealth Management France. "A risk premium should continue to be applied to French assets. A fragile French government, less committed to reducing the budget deficit and undertaking reforms, could also slow down the euro," adds Cesar Perez Ruiz, Head of Investments and CIO at Pictet Wealth Management.

In the US, government bond yields continue to ease, putting pressure on the greenback, as a fall in federal rates at the start of the school year becomes clearer.

"The employment report did not spoil the party in the United States. After a very disappointing ISM services index (48.9 vs. 52.6 expected), the official employment figures confirmed this trend Job creation continued to decline (206k vs. 189k expected) and it should be noted that the estimates for May and April have been revised downwards," says Romane Ballin, bond manager at Auris Gestion. .

Right now, the EUR/USD is trading at $1.0823.

KEY CHART ELEMENTS
In strong volatility in week 27, the EUR/USD returned to 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 the EUR/USD is positioned between support at $1.0758 and resistance at $1.0885.