EUR/USD: A contraction of risk appetite in the EU

The EUR/USD, one of the most reliable barometers of risk appetite, was suffering near $1.0550 per ?, as geopolitical risk returned to the forefront, since the signing of a Russian presidential decree authorizing the expansion of the conditions for the use of atomic weapons.

Quoted by AFP, Dmitry Peskov, a Kremlin spokesman, considered that this decision was "necessary" in the face of "threats" from the West. This decision by Russia comes two days after the Biden administration gave Ukraine a boost, allowing it to strike Russian soil with American long-range missiles. And after, according to the Russian military, Ukraine launched 5 tactical missiles on Russian territory. 4 were destroyed and the last was damaged by Russian air defense. AFP confirmed the strike with a Ukrainian official who spoke on condition of anonymity.

In the macroeconomic chapter, for the Eurozone, the final data on consumer prices, in final data for the month of October, excluding food, energy, alcohol and tobacco, came out at +2.8% on an annual basis, in line with initial estimates. No news on housing starts and building permits for housing in October in the United States, very close to expectations.

Currency traders are gradually losing their appetite for risk as Trump reveals his next appointments. Thomas Giudici, head of bond management at Auris Gestion, notes "thus the future appointments of (i) Matt Gaetz to Justice, subject to an ethics report from the House of Representatives for various alleged sexual offenses and embezzlement, of (ii) Robert Kennedy Jr, as Secretary of Health, dragging the entire pharmaceutical sector into the red, of (iii) Brendan Carr at the head of the telecoms regulator and quite fiercely opposed to GAFAM, which he considers a censorship cartel to be dismantled, or, for example, of (iv) Chris Wright as Secretary of Energy and founder of a company specializing in hydraulic fracturing and shale oil."

Let's add to this list Linda McMahon, former boss of American wrestling, who was offered the position of Minister of Education... The billionaire was in charge of SMEs during Trump's first term.

Right now, the EUR/USD is trading at $1.0550.

KEY CHART ELEMENTS
The currency pair has just broken out of a wedge pattern in intense volatility, confirming the bearish bias, which is now fundamental. Since then, the fragile supports have been breaking one after the other. Negative opinion maintained.

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 $1.0549. The price target of our bearish scenario is at $1.0101. To preserve the capital invested, we advise you to position a protective stop at $1.0681.

The expected profitability of this strategy is 448 pips and the risk of loss is 132 pips.