EUR/USD: Powell subject to Congress questionning

The EUR/USD remained under pressure as the first part of the parliamentary hearings of J Powell, Chairman of the Fed, approached.

"All the interventions of the Chairman of the FED are monitored, but this one has a special character. It comes a few weeks after the inauguration of Donald Trump and in a context where the Fed has paused on rate cuts due to the lack of new progress on the inflation front", says Alex Baradez (IG France).

And it is not the NFP (private employment report) published on Friday that will give dovish arguments to the Fed executives. As a reminder, this report is rather solid, because if job creations (excluding agriculture) come to 144,000, a little below expectations, the increase in the average hourly wage (+0.6%) is intriguing, especially since the target defined by the consensus was +0.4%. Finally, the unemployment rate, expected to remain stable at 4% of the working population, is falling to 3.9%.

It is therefore with particular vigilance that traders will gauge the consumer prices (CPI) that will be published tomorrow at 14:30 (EU time).

"In the context of strong trade uncertainty, Jerome Powell should not change his tune in front of the senators, he will probably plead for patience before further rate cuts, waiting to see more clearly concerning the effects on prices and employment of the new policies put in place by the Trump administration."

As a reminder, the markets are indeed starting the week with a new salvo from Donald Trump on the subject of customs duties. The American president said on Sunday, 9 February, that he planned to implement additional customs duties of 25% on all steel and aluminum imports into the United States."

Right now, the EUR/USD is trading at $1.0321.

KEY GRAPHIC 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. In the immediate future, the currency pair is tracing, in the upper part of the Bollinger bands, a negative harami structure. Once perfect parity is reached, namely $1 for one ?, a vigorous buying reaction of protest could then 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 $1.0316. 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 $1.0449.

The expected profitability of this strategy is 315 pips and the risk of loss is 133 pips.