EUR/USD: Trump and his deadcatting strategy

The Euro was (a little) back in color in the face of the relative lull on the front of American customs duties imposed on imported products.

The US President agreed to postpone by one month those affecting Mexico, then those on Canada, after the two countries agreed to strengthen their border controls. This is a reminder that the American President uses customs duties as a negotiating tool.

Even the brutal 47th President of the United States himself acknowledged that Americans could "suffer", adding, on his Truth network, that it was the price to pay to experience a new golden "age". Bristling barriers of all kinds, to better prosper, such is the DNA of the Trumpist "philosophy"... Hitting hard, to better negotiate afterwards, here is another mantra of the real estate magnate.

In general, the foreign exchange market is trying to deal with Trump's unpredictability, who one day becomes a chief customs officer, another a poker player, another a diplomat in short pants... The latest fad: the American President wants the United States to "control" the Gaza Strip, whose population could emigrate to Egypt or Jordan. The goal? To establish peace in the region and... create a "riviera" there that would be "magnificent"... Another fine example of "deadcatting"!

Traders will be closely following the conclusions of the survey by the private human resources firm ADP on US private employment at 14:15 (EU time), a "foretaste" of the publication at the end of the week of the always highly anticipated NFP (Non Farm Payrolls), the monthly federal report on the health of employment. A good health that was again cited by Powell, at the end of the last FOMC, to justify the monetary status quo.

"Even though we are far from the 2022 [inflation] peak at 5.5%, the lack of progress has obviously been noticed by the Fed, which justified Jerome Powell's change of speech in December but also in January, with a change in the language elements concerning inflation and employment in the Fed's latest press release on Wednesday," notes Alexandre Baradez (IG France).

Right now, the EUR/USD is trading at $1.0414.

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 euro, 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 $1.0424. 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 $1.0541.

The expected profitability of this strategy is 423 pips and the risk of loss is 117 pips.