EUR/USD: round table with C. Lagarde at Davos

Without questioning its underlying bearish bias against the dollar, the euro was breathing a little, two days after Trump's glorious inauguration at the White House.

On the thorny customs issue, the new tenant of the White House clearly targeted, at first, immediate neighbours Canada and Mexico. The new president hasn't announced any figures for China and Europe, for the moment, but he was more specific for Canada and Mexico: "We are thinking of 25% for Mexico and Canada, because they authorise a large number of people" to enter the United States. Adding: "I think we will do it on 1 February", notes Alex Baradez (IG France - for whom "the tone is set".

Donald Trump went so far as to say the following sentence: "customs duties (tariffs) is the most beautiful word in the dictionary"...

"Even if he has relatively spared Europe recently, he nevertheless made it clear that Europeans will have to buy a lot more US oil and gas to fill the trade deficit. He was also less aggressive with China, not announcing any specific figures, simply indicating that he was going to "meet President XI and discuss with him"

On the agenda macroeconomic today, to follow in priority a speech by Mrs. Lagarde, President of the ECB, on the occasion of a round table entitled "Beyond the crisis: unleashing Europe's potential" during the annual meetings of the World Economic Forum in Davos. A fundamental subject while, in the words of Christopher Dembik, investment strategy advisor at Pictet AM, "the Trump presidency should confirm the decoupling between Europe and the United States. The update of the IMF's growth forecasts for 2025 confirms the death of the idea of ​​a reconvergence of growth dynamics between the United States and Europe this year, an idea that prevailed a year ago."

The main figure yesterday, the confidence index in the leading economic power of the Eurozone, expected to fall slightly to 15.25 points, collapsed to 10.2. "The second consecutive year of recession has lowered economic expectations in Germany," comments ZEW President Achim Wambach, PhD,

"The year started with a notable decline in the ZEW. This could be due, among other things, to the recently published negative GDP growth figures and increasing inflationary pressures. The lack of spending by private households and weak demand in the construction sector continue to hold back the German economy. If these trends continue this year, Germany will fall further behind other Eurozone countries. There is also greater political uncertainty, due to a potentially difficult coalition formation process in Germany and the unpredictability of the economic policy pursued by the new Trump administration."

Right now, the EUR/USD is trading at $1.0422.

KEY CHART ELEMENTS
The 50-day moving average (orange) continues to act as a strong technical and chart barrier. In the shorter term, it is even its 20-day counterpart (in dark blue) that acts as dynamic resistance. And this without the RSI oscillator positioning itself in the oversold zone.

Once perfect parity is reached - $1 = 1 euro - an energetic buying reaction of contestation could 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 $1.0446. 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 $1.0609.

The expected profitability of this strategy is 445 pips and the risk of loss is 163 pips.