EUR/USD: calm returns after a week of prosperity for risky assets

In unison, the various risk asset classes continued to surf on the very good moves seen last week as the political of the next 4 years in the US became clearer. The euro was no exception, with a gain of 222 pips over the whole of last week. The time is ripe for healthy consolidation.

After the consistent announcements this weekend in the media, we can use the indicative mode: Joe Biden will become the 46th President of the United States, after the mid-December vote of the electorate, and will take office early next year, depriving the great Mr. Trump of a second term. As far as legislative power is concerned, the House of Representatives would remain in the hands of the Democrats and the Senate in those of the Republicans.... subject to the outcome of a by-election in Georgia in January. This is Biden's next major challenge. An issue whose importance is currently underestimated by the markets.

In any case, "the victory of the Democratic candidate has finally been seen in a good light because it could normalise the international relations of the United States. Moreover, observers expect a more stable policy from the Democratic President after the occasional changes of position by President Trump," say Vince Bay, an analyst at IG France.

The Fed ended a new monetary policy meeting on Thursday. "The Fed remains in autopilot mode and did not feel, despite the headwinds (Covid-19, uncertainty about Biden and a lack of stimulus) to act before December," says John Plassard, who said investors "however seemed reassured by the 'moral' support of the U.S. monetary institution. While the Fed unsurprisingly opted for the monetary status quo, he reiterated that it would "do what is necessary to support the economic recovery". Now, be careful not to disappoint," Plassard warned.

In terms of statistics, the main event last week was the NFP (Non Farm Payroll) report on US employment for last month. The surprise was good, especially concerning the unemployment rate, which is melting at 7.0% of the active population, versus 7.8% expected. In addition, job creation in the private sector (excluding agriculture) is estimated at 639,500 by the US Department of Labour, beating the target by a nice margin.

As of right now, the EUR/USD is trading at $1.1893.

MEDIUM TERM FORECAST

In view of the key chart factors we have mentioned, our opinion remains neutral in the medium term on the pair's exchange rate.

We will maintain this neutral view as long as its price is positioned between support at $1.1745 and resistance at $1.1900.