EUR / USD: A FOMC that takes on a particular color after Jackson Hole

(BFM Bourse) – The Euro held firm in the upper part of the lateralization pattern against the Dollar in the middle of the week. Forex traders will lean towards the Fed on Wednesday, as the Fed concludes a meeting of its Monetary Policy Committee. FOMC which takes on a particular tone, since it is the first meeting of this type after the new strategic directions presented by Mr Powell at the Jackson Hole symposium.

As a reminder, J. Powell had formalized a major shift in the institution’s policy by affirming that it would let itself be guided above all by the level of employment, even if it meant letting inflation “moderately” go beyond its 2% annual price increase target. Schematically, this threshold no longer becomes an upper limit but a target to be reached on average over time, which means that the Federal Reserve will tolerate a higher level if necessary for a certain time, after a phase of too low inflation. . The message sent is that of ensuring long-term monetary support.

“The Fed has written the theoretical page, but now we have to move on to practice,” notes Thomas Rosberg, senior economist at Pictet WM. “There should be no new inflation-linked rate guidance or additional QE – this week at least. Nonetheless, we still believe the Fed will increase QE (today by $ 120 billion per month) before the end of the year “, continues the economist.

Yesterday the match on the statistical side turned to the advantage of the single currency, in particular because of a clear disappointment on the side of the American industry.

The ZEW investor confidence index in Germany, the Eurozone’s largest economy, rose this month to 77.4, well above target. Zentrum für Europäische Wirtschaftsforschung President Prof Achim Wambach commented: “The ZEW indicator of economic sentiment has risen again, signaling that experts continue to expect a noticeable recovery in the German economy. The talks over the frozen Brexit and rising COVID-19 cases could not dampen the positive mood. However, the still negative outlook for the banking sector reveals fears of an increase in the number of defaults in the six months to come “.

Across the Atlantic, two leading indicators have clearly beaten expectations: the manufacturing index of the NY Fed (Empire State), which jumped to 17.0 this month, against 3.7 in August. And import prices, which took 0.9% monthly in August. On the other hand, the federal monthly report (August) on American industry disappointed, below expectations whether for the production dynamic itself (+ 0.4%) or the rate of use of productive capacities (71.4%). In China, on the other hand, industrial production rebounded last month by 5.6%, more than expected, to its best level in eight months. And retail sales in the Middle Kingdom also surprised for the better.

This Wednesday morning, the Euro also finds support with the foreign trade figures of the Euro Zone, the trade balance showing in July, in final data, a surplus of 20.3 billion euros, or 1 billion beyond the target. The surplus for June was 16 billion.

To be continued on the US side, retail sales at 2:30 p.m., corporate stocks at 4:00 p.m., oil inventories at 4:30 p.m., the Fed’s monetary policy decision at 8:00 p.m. followed by a press conference at 8:30 p.m.

At midday on the forex market, the Euro was trading against 1,1865$ approximately.

KEY GRAPHIC ELEMENTS

The Euro / Dollar currency pair is in the very high phase of a lateralization pattern, the base of which remains firmly anchored at $ 1.1745. In the absence of a sufficiently interesting entry point, traders will avoid taking a position on the spot. We are keeping the major chart and technical area of ​​$ 1.1745 / 1.1750 under close watch. Its rupture would be synonymous with the release of selling energy. On condition that this rupture is technically validated. This level will have to be tested once again … Only a clear and frank overshoot of $ 1.2000 would lend credibility to the scenario of a continuation in the fall of a major upward development.

MEDIUM-TERM FORECAST

In view of the key graphical factors that we have mentioned, our opinion is neutral in the medium term on the pair Euro Dollar (EURUSD).

We will keep this neutral opinion as long as the price of the pair Euro Dollar (EURUSD) is positioned between the support at 1.1745 USD and the resistance at 1.2000 USD.

DAILY DATA CHART

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