EUR/USD: Under pressure of the $1.09 level

As the Fed's Monetary Policy Committee meeting approaches, the EUR/USD remained relatively stable, significantly below the $1.09 resistance level. A status quo is the consensus for this meeting, which will nevertheless be an opportunity to glean clues for the future.

Pictet Wealth Management strategists expect "two 25 basis point rate cuts this year, in September and December, given the slowdown in inflation and especially the cooling of the labour market. But until we see a further deterioration in labor demand and an increase in layoffs (and not just a normalization), we will continue to expect a pace of quarterly cuts. There is a risk of a decline in wages this week due to Hurricane Beryl, which hit Texas and is responsible for part of the recent increase in jobless claims."

Yesterday, the statistical calendar finally got denser, with real estate prices (S&P Case Schiller index) up 6.9% annually, the consumer confidence index (Conference Board) as well as new job offers (JOLTS) at 8.19M. This last figure is a foretaste of employment, before many meetings (ADP survey this Wednesday, unemployment benefit registrations, NFP report), throughout the week.

To follow today: the Chicago PMI at 15:45 p.m. (EU time), before pending home sales at 16:00 p.m. and crude inventories at 16:30 p.m. At 20:00 p.m., we will follow the Fed's verdict, before its press conference at 20:30 p.m. A rich program on the statistical front, this Wednesday.

In the immediate future, traders have taken note of the inflation figures in the Eurozone, in the sense of consumer prices in preliminary data for the month of July. EuroStat estimates the annual increase in prices at +3%, excluding food, energy and tobacco, while on average the economists and analysts surveyed were expecting +2.9%.

Right now, the EUR/USD is trading at $1.0844.

KEY CHART ELEMENTS
After failing against a graphical resistance level around $1.0910, the EUR/USD has fallen back, 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 $1.0827. The price target of our bearish scenario is $1.0601. To preserve the invested capital, we advise you to position a protective stop at $1.0907.

The expected profitability of this forex strategy is 226 pips and the risk of loss is 80 pips.