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#1 30-07-2024 11:38:59

johnedward
Admin & Trader
From: Paris - France
Registered: 21-12-2009
Posts: 3712
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EUR/USD: The end of risk appetite in sight

EUR/USD: The end of risk appetite in sight


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Against a backdrop of shrinking risk appetite on the financial markets, the euro suffered from a short-term downward trend against the dollar, while the statistical calendar is clearly getting denser this Tuesday, after the desert crossed yesterday. Three American figures of major importance are particularly expected this afternoon: the American consumer confidence index (Conference Board), new job offers, and S&P CS real estate prices.

On this side of the Atlantic, currency traders learned about the GDP growth in the Eurozone, at +0.3% in Q2, helped by the French component which slightly exceeded expectations.

Tomorrow, it will be the turn of the survey by the private human resources firm ADP to set the tone on the health of American private employment, before the publication on Friday of the monthly NFP (Non Farm Payrolls) report. In the meantime, on Thursday, traders will focus on weekly jobless claims and the ISM manufacturing PMI index.

This is an opportunity to more accurately gauge the "normalization" of the world's major economies, and the ability, especially in the United States, to see economic activity land smoothly. One scenario is currently holding the line: two federal rate cuts this year, almost certainly at the start of the school year.

The risk appetite, which influences the Euro against the safe haven Dollar, may be affected by the Chinese banking sector. As compiled by Christopher Dembik, investment strategy advisor at Pictet AM, "The situation in China is causing cold sweats among investors around the world. This time, it is the banking sector that is the main focus. In one week, 40 banks have disappeared. The country is facing a silent banking crisis. Nearly 3,800 small local banks ? mainly located in rural areas ? are in difficulty. This is the equivalent of 13% of the Chinese banking system."

The decline in oil prices is also maintaining some pressure on the single currency, with a barrel of light Texas crude contracting to around $75.

Right now, the EUR/USD is trading at $1.0834.

KEY CHART ELEMENTS
After failing against a graphical resistance level around $1.0910, the EUR/USD has retreated, now in a congestion zone of two remarkable moving averages, at 20 and 50 days. Negative opinion maintained.

MEDIUM-TERM FORECAST
In view of the key graphical factors that we have mentioned, our opinion is negative in the medium term on the EUR/USD.

Our entry point is at $1.0834. The price target of our bearish scenario is at $1.0601. To preserve the capital invested, we advise you to position a protective stop at $1.0907.

The expected profitability of this strategy is 233 pips and the risk of loss is 73 pips.

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