EUR/USD: Consolidation of the recent rise

While the statistical calendar, rather scattered since the beginning of the week, leaves traders alone, and fears about the Yen gradually fade, the EUR/USD consolidated its sharp rise that began last week.

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 an employment report that was particularly disappointing, especially on the job creation front, and the surprise increase in unemployment, to 4.3% of the working population. On Wall Street, the penalty was heavy, especially 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 American macroeconomic statistics cool the mood. A little relief, however, yesterday with the ISM services index which came 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 don't see how a rate cut by the Fed would succeed in stemming the panic", he adds.

It should be noted that the monthly deficit of the trade balance for June in France came out at 6 billion euros, against a target of -7.4 billion euros. The calendar is getting denser tomorrow with, among other joys, the new weekly registrations for unemployment benefits, which will be all the more closely followed since the latest NFP report brought its share of bad surprises.

Right now, the EUR/USD is trading at $1.0919.

KEY CHART ELEMENTS
Our short positions are immediately stopped on the EUR/USD, with the volatility that exploded on Friday. We remain waiting for clear signals allowing us to glimpse a new sustainable directional, 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.