EUR/USD: traders are eyeing US consumer prices today

The single currency continued to suffer, against the dollar, from the dichotomy of monetary policies on both sides of the Atlantic, since the Fed adopted a much firmer tone at the end of last year, forced to be patient in its rate cut process, in the face of the accumulation of excellent macroeconomic news. The latest employment report (NFP published at the end of last week) confirmed this working basis.

In the immediate future, the currency pair is attempting a very slight technical reaction, towards a dynamic resistance zone, namely the 20-day moving average (in dark blue).

It is in this context that traders will take note of US consumer prices (CPI) today at 14:30 (EU time), one of the flagship measures of inflation, and therefore an essential working basis for the Fed in the construction of its monetary policy. Prices are expected to rise by 3% on an annual basis, compared to 2.6% last month, for the broadest basket of products.

Traders will also continue to follow Trump's customs announcements, a few days before his official inauguration. On Monday evening, the Bloomberg news agency reported that the Trump administration was considering gradually introducing customs surcharges of 2% to 5% per month, rather than implementing them all at once. This process would help avoid a spike in inflation and give the United States negotiating power, according to sources close to the agency. Bloomberg specifies that this project is only in the preliminary stages and that it has not been presented to Donald Trump.

In the immediate future, currency traders have just learned of a lower-than-expected monthly increase in industrial production in the Eurozone (+0.2% against +0.3% expected), for the month of November. In addition to the American CPI, we will also be monitoring the Empire State manufacturing index at 2:30 p.m.

Right now, the EUR/USD is trading at $1.0309.

KEY CHART ELEMENTS
The reaction movement at the beginning of the month, encouraged by press information denied by D Trump, is already running out of steam.

This surge is not likely to thwart the underlying bearish bias, but sends a legitimate message of protest. The 50-day moving average (in orange) continues to constitute a solid technical and graphic barrier.

Once perfect parity is reached, $1 = 1 euro - an energetic buying reaction of protest could take place.

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 $1.0305. The price target of our bearish scenario is at $1.0001. To preserve the invested capital, we advise you to position a protective stop at $1.0421.

The expected profitability of this strategy is 304 pips and the risk of loss is 116 pips.