EUR/USD: A break in the trendline

Despite fears of a general conflagration in the Middle East, the EUR/USD, a reliable indicator of risk appetite, remained firm and close to its annual highs around $1.1190, with traders finally showing confidence in the ability of the American economy to land "softly", and satisfied by the large-scale measures taken by Beijing to support, among other things, the real estate sector and consumption.

"In the United States, it was the employment figures in August and September that disappointed. Unemployment registrations and job applications increased significantly, raising concerns among economists. Other economic statistics relating to consumption, investment or the confidence of economic agents remain positive, which validates our scenario of a soft landing for the American economy", adds Emmanuel Auboyneau, AMPLEGEST Associate Manager.

The MSCI China gained another 4% after the new stimulus measures were announced.

Currency traders took note on Friday, in particular, as a statistical highlight, of PCE prices (personal consumption expenditures), the Fed's preferred measure in its assessment of inflation. Prices rose only very modestly, excluding volatile items, by 0.1%, compared with a target of 0.2%. The consumer price index in the United States slowed to 2.1% over one year in August, against 2.4% expected by the consensus and 2.6% the previous month. These signs of easing on prices are all the more appreciated as they maintain hopes of new rate cuts in the United States. Also released on Friday, the revised data for the consumer confidence index (U-Mich) gained momentum, moderately above the target, crossing 70.

Traders will be attentive tomorrow to the general policy speech by Mr Barnier, new Prime Minister of the second economic power of the Eurozone.

"The stakes are high", decides Christopher Dembik, investment strategy advisor at Pictet AM. "The public deficit, initially forecast at 5% of GDP this year, should finally reach 6%. To reassure the European Commission and return to a more sustainable budgetary trajectory, it will be necessary to find at least 30 billion euros in savings next year (low estimate)."

"In 2017, the rate spread between the Portuguese 10-year and the French 10-year was 300 basis points. It is now negative (-20 basis points). This means that the markets have more confidence in Portuguese public finances than in those of France. This is justified."

Right now, the EUR/USD is trading at $1.1166.

KEY CHART ELEMENTS
The spot has once again weakened an oblique graphic support line, relaunching the idea of ​​the formation of a chart pattern. A clear break of this threshold would weaken the currency pair for the coming weeks. A neutral position is adopted while waiting, if necessary, for a signal.

MEDIUM-TERM FORECAST
In view of the key graphic 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 $1.1012 and the resistance at $1.1250.