EUR/USD: Trump is playing poker and Risk

Market psychology on the currency pair remained unfavorable to the euro, in a context of trade war. In general, the foreign exchange market is trying to deal with the unpredictability of Trump, who one day becomes a chief customs officer, another a poker player, another a diplomat in short pants... 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"!

Yesterday, the private human resources firm ADP will put the number of job creations in the private sector at 182,000, well beyond expectations, confirming the tensions on the job market across the Atlantic. Tomorrow's NFP (Non Farm Payrolls) will be even more scrutinized... Because this chronic heating on the job market naturally has an impact on prices. Here are the main consensus elements of tomorrow's report: unemployment is expected to be stable at 4% of the workforce, the number of job creations in the private sector excluding agriculture at 170,000, and the monthly increase in wages contained at +0.3%.

Alex Baradez (IG France) points out that last week, "PCE inflation, the Fed's preferred inflation measure, the one it uses in its quarterly projections, still came out at 2.9%, marking a sixth consecutive month without further progress towards the Fed's 2% target. It even rebounded slightly over this two-quarter period, going from 2.7% to 2.9%. Even though we are far from the 2022 peak at 5.5%, the lack of progress was obviously 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."

Right now, the EUR/USD is trading at $1.0372.

KEY CHART ELEMENTS
The 50-day moving average (in orange) continues to constitute a technical and graphic barrier solid. 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, in the upper part of the Bollinger bands, a negative harami structure. Once the perfect parity is reached, namely $1 for 1 euro, an energetic buying reaction of contestation 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 $1.0359. 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 $1.0471.

The expected return on this forex strategy is 358 pips and the risk of loss is 112 pips.