EUR/USD: Below $1.055, the pressure remains strong

The EUR/USD remains sluggish around the $1.0550 pivot, at the heart of a basic bearish trend against the Dollar, while the week is taking place under the sign of American employment, with a string of statistics that are very good for the moment, and French politics, while the two motions of censure, filed by the most extreme camps in the Assembly, will be submitted to the vote of the deputies this afternoon. The rule is clear: a majority of deputies votes for one of the motions and the government falls.

"The tensions on the French bond market are, of course, still present. Portugal is now borrowing at 40 basis points less at 10 years than France. But for the moment, there is no panic", says Christopher Dembik, investment strategy advisor at Pictet AM. "Barring any last-minute surprises, the motion of censure should be voted on. This is already included in the prices of financial assets."

"The new Prime Minister, who could possibly be the outgoing one, will have the difficult task of presenting a special law in the coming days to allow the 2024 budget to be renewed and which will have to, in particular, include the possibility offered to Social Security to borrow."

On the American employment file, operators will learn the results of the survey by the private firm ADP at 14:15 (EU time), a prelude to the publication at the end of the week of the monthly NFP report. Also to follow tomorrow are the traditional weekly registrations for unemployment benefits, expected at a level still as close as 200,000. Currency traders noted yesterday data relating to the employment market for the month of October which highlighted an increase in job offers. According to the JOLTS report from the US Department of Labour, the number of job openings reached 7.75 million in October, compared with 7.38 million in September.

The PMI services activity barometer in the Eurozone, came out for the month of November in final data symbolically below the 50 point mark, at 49.55, not far from the target. To follow at 16:00, the US PMI ISM services.

Right now, the EUR/USD is trading at $1.0537.

KEY CHART ELEMENTS
The currency pair has just come out of the bottom, in intense volatility, from a wedge pattern, which confirms the bearish bias, now in place. Since then, the fragile supports have broken one after the other. Negative opinion maintained. Nevertheless, at this stage the decline, the formation of a technical rebound cannot be long in coming, we are watching for signs.

In the immediate future, the EUR/USD is completing a textbook pullback (graphic rejection) on $1.0550.

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

Our entry point is at 1.0501 USD. The price target of our bearish scenario is at 1.0101 USD. To preserve the capital invested, we advise you to position a protective stop at 1.0651 USD.

The expected profitability of this Forex strategy is 400 pips and the risk of loss is 150 pips.