EUR/USD: targets shift to the upside

KEY TECHNICAL ELEMENTS
The EUR/USD is trading in a context that remains favorable to the European currency, supported by the anticipation of a gradual easing of monetary policy in the United States. Markets continue to price in several Federal Reserve rate cuts over the coming year, which maintains structural pressure on the greenback despite some short-term stabilisation phases linked to profit-taking at the end of the year.

In the eurozone, the ECB maintains a more measured tone. While the disinflation cycle is confirmed, the institution remains attentive to financial conditions and the transmission of its monetary policy, which currently limits any expectation of easing as rapid as that seen across the Atlantic. This divergence in policy trajectories between the two central banks is a supporting factor for the euro against the dollar.

The geopolitical context also plays a significant role. Discussions surrounding a possible de-escalation of the conflict between Russia and Ukraine, following exchanges between Donald Trump and Volodymyr Zelensky, have helped to temporarily ease risk aversion. A sustained stabilisation of the situation would reduce certain risk premiums embedded in currencies, to the benefit of European currencies.

In Asia, the Bank of Japan continues to prepare markets for a very gradual normalization of its monetary policy. While the yen benefits temporarily from this rhetoric, the impact on the euro-dollar remains marginal, as the foreign exchange market remains largely dominated by American and European dynamics.

From a technical perspective, the underlying trend for the euro-dollar remains clearly bullish. Rates are trading above their key moving averages (particularly the 20-day moving average), confirming a constructive structure. The targets are at the year's highs, while pullbacks towards the 20-day moving average can be used to support the upward trend.

MEDIUM-TERM FORECAST
Based on the key technical factors we have mentioned, our outlook for the EUR/USD is positive in the medium term.

Our entry point is $1.1778. The price target for our bullish scenario is $1.1919. To protect your capital, we advise placing a stop-loss order at $1.1386.

The expected profit for this forex strategy is 141 pips, and the potential loss is 392 pips.