EUR/USD: no directional shift following US inflation figures

The euro remained under pressure from its 20-day moving average against the dollar, the day after the publication of rather reassuring US inflation figures, figures that will have had a marked impact on the technological side of the stock market, with the Composite gaining nearly 2.5%. On the exchange rates, the impact is almost nil, and the market psychology unchanged. It should be noted that the US 10-year nevertheless fell back below 4.7% following the publication of these figures, before stabilizing around 4.65%, a level that remains firm.

On an annual basis and for the broadest basket of products, inflation stands at 3% in the US. Published Tuesday, excluding food and energy, "producer" prices, which constitute an advanced barometer of inflation, came out stable, a good surprise compared to the consensus of +0.2% monthly.

"The good news from this inflation report is that after three months of stagnation at 3.2%, core inflation resumed its downward trend in December (3.1%). This is clearly good news for the Fed," says Bastien Drut of CPR AM.

However, these figures give hope, and do not bury, the prospect of two 25 bps cuts this year for the remuneration of the Fed Funds. Instead of only 25 bps.

The euro is resisting a little at midday, with the publication of an excess of consensus concerning the monthly balance of its trade balance, at nearly 12 billion euros in November. We will be closely monitoring the following American figures at 14:30 (EU time): retail sales, weekly unemployment benefit registrations and the Philadelphia Fed manufacturing index.

On the margins, the euro also put up some resistance with the excellent performance of luxury stocks on the stock market, mechanically pulling the CAC 40, after an impeccable publication by the Swiss Richemont.

Right now, the EUR/USD is trading at $1.0290.

KEY CHART ELEMENTS
The 50-day moving average (in orange) continues to constitute a solid technical and graphic barrier. In the shorter term, it is even its 20-day counterpart (in dark blue) that acts as dynamic resistance. And this without the RSI oscillator positioning itself in the oversold zone.

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 $1.0287. The price target of our bearish scenario is at $1.0001. To preserve the capital invested, we advise you to position a protective stop at $1.0391.

The expected profitability of this Forex strategy is 286 pips and the risk of loss is 104 pips.