EUR/USD: the USD's remuneration potential called into question

Little change in the market psychology governing the EUR/USD, with pressure placed both on the single currency, against a backdrop of fears of political paralysis in France, and on the greenback, whose potential to " remuneration" is being undermined by the increasingly clear prospect of a fall in federal rates at the start of the school year.

The tone adopted by J Powell before Parliamentarians, in a biannual hearing this week, the passage of the ISM services below the 50 point mark last week, just like the content of the latest federal report on employment, together argue for a soft landing scenario for the American economy.

J Powell, Chairman of the Fed, was on the grill, for the second day, for questions from American Parliamentarians. The day before before the Senators, the central banker declared that maintaining an overly restrictive monetary policy "could unduly weaken economic activity and employment" and that "labour market conditions have now cooled considerably", notes Deutsche Bank .

"There was therefore a recognition of the risk of remaining on hold for too long," concludes the German bank. Jerome Powell spoke this Wednesday, this time before a committee of the House of Representatives. But his speech on Tuesday, which highlighted "progress" regarding inflation, has hardly changed.

In France, no name emerges for the post of prime minister, even the camp of which is not obvious. The President clearly said in a letter to the French that "no one [had] won at the end of these early legislative elections". Yesterday, on the set of France Televisions, Olivier Faure, First Secretary of the Socialist Party declared that "we are all hungry to see a result"... In the meantime, Gabriel Attal's government is managing current affairs.

Right now, the EUR/USD is trading at $1.0833.

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.