EUR/USD: the dollar is in the red

The EUR/USD was attempting to start a consolidation movement, after two sessions of explosive volatility, against a backdrop of sudden fears of the US economy entering a recession.

Everything accelerated on Thursday, with the publication of an activity indicator (ISM manufacturing), two points below expectations that were themselves pessimistic, and on Thursday, with a report on employment that was particularly disappointing, notably on the job creation front, and the surprise increase in unemployment, to 4.2% of the working population. On Wall Street, the penalty was heavy, notably on technology companies that are just coming out of a rather contrasting quarterly ball.

The scenario of a drop, not of 25, but of 50 basis points in the remuneration of the Fed Funds, is gaining weight as US macroeconomic statistics cool the mood. Some relief, however, yesterday with the ISM services index coming out at 51.3, slightly above expectations.

"Analysts are talking about the possibility that the Fed will meet urgently before the September deadline to lower its rates," notes Christopher Dembik, investment strategy advisor at Pictet AM, for whom this option "seems crazy".

"Incidentally, we do not see how a rate cut by the Fed would succeed in stemming the panic."

Right now, the EUR/USD is trading at $1.0911.

KEY CHART ELEMENTS
Our short positions are immediately stopped on the EUR/USD, with the volatility that exploded on Friday. We are still waiting for clear signals that allow us to glimpse a new sustainable direction, before exposing ourselves again.

MEDIUM-TERM FORECAST
In view of 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 the support at $1.0906 and the resistance at $1.1012.