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EUR/USD: Trump taxes hard, and then negotiates
The Euro remained under pressure against a backdrop of rising trade tensions between the United States and its main "partners".
After confirming initial measures against its immediate neighbors (Canada and Mexico up to 25%), as well as China (an additional 10%), the American President bares his claws by showing himself to be increasingly threatening against the European Union. The index managed to limit its decline after Donald Trump's decision to suspend a surcharge on imports from Mexico for one month.
With a vocabulary that is still "rich", the White House tenant declared in front of an audience of journalists, based on the trade deficit with the European Union: "They don't take our cars or our agricultural products, almost nothing and we all take, millions of cars, a huge amount of agricultural products".
"I don't have a timetable but it's for very soon!", he said.
To exaggerate, the White House tenant hits hard, and then discusses...
"If the impact of such customs tariffs on growth and inflation is difficult to measure (numerous offsetting effects), how far is D. Trump prepared to make Americans "suffer"? The coming days will allow us to determine to what extent D. Trump wants to go to the end of his trade war or if this is just a vast game of negotiations", analyses Thomas Giudici, Head of bond management at Auris Gestion.
In the statistical chapter yesterday, currency traders learned of the final data from the manufacturing PMI barometers in the Eurozone. "Relative" good surprise with the German component alone, closely watched, which comes out at 44.9 compared with 44 in the first estimate. The score remains 5 points below the 50-point threshold, which separates by construction a contraction from an expansion of the sector considered. Inflation for the month of January, in the Eurozone, excluding food, energy, alcohol and tobacco, came out at +2.6% at an annualized rate, slightly above the consensus. As for the American manufacturing PMI, it symbolically rose above the 50-point mark, at 50.9, compared to 40.2 last month.
On the macroeconomic agenda this Tuesday, to follow in priority the new job offers (JOLTS) in the United States at 16:00 (EU time).
Right now, the EUR/USD is trading at $1.0334.
KEY CHART ELEMENTS
The 50-day moving average (in orange) continues to constitute a solid technical and graphic 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. In the immediate future, the currency pair is tracing a negative harami structure in the upper part of the Bollinger bands. Once the perfect parity is reached, namely $1 for ?1, an energetic buying reaction of protest could then 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 $1.0332. 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 $1.0449.
The expected profitability of this strategy is 331 pips and the risk of loss is 117 pips.
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