EUR/USD: the 20-day moving average is applying pressure

The renewed appetite for risk on the main European stock markets, particularly in France, allowed the euro to "breathe" versus the dollar, the leading currency pair pausing below its 20-day moving average (in dark blue). But the backdrop, the general framework, remained the same, despite reassuring figures on US inflation published earlier in the week. The underlying bias therefore remains bearish, due to the dichotomy of the monetary policies of the Fed and the ECB for the coming months.

Inflation figures that will therefore not revolutionize the Fed's attitude, forced to be patient, in 2025.

"The influential president of the New York Fed, John Williams, said yesterday that "government policy is the main source of uncertainty". And even Austan Goolsbee, although a "dove" of the Fed, said that "If Congress and the President decide on policies that increase prices, the Fed must take that into account."" notes Alex Baradez (IG France).

"The fight against "sticky" inflation is not over for the Fed, and the tone of the monetary institution's communications should not change before, at least, March and the next quarterly projections."

In Europe, the final consumer price data for December have just been published, without any deviation from the initial estimates. Excluding volatile items (food, energy, alcohol and tobacco), prices rose by 2.8% on an annual basis, at the same rate as in November.

Coming up at 15:15 (EU time) is the monthly report on US industry (production volumes and capacity utilisation rates).

Right now, the EUR/USD is trading at $1.0295.

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

Once perfect parity is reached - $1 = 1 euro - a vigorous buying reaction of protest could take place.

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

Our entry point is at $1.0301. 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 $1.0416.

The expected profitability of this strategy is 300 pips and the risk of loss is 115 pips.