EUR/USD: Are we heading towards parity?

The euro remained under pressure against the USD, in the context of a rekindled trade war, and in the wake of the publication of a particularly firm report on US jobs, which will force the Fed to toughen its stance.

The markets are indeed starting the week with a new salvo from Donald Trump on the subject of customs duties. The American president declared yesterday that he planned to implement additional customs duties of 25% on all steel and aluminum imports into the United States.

"I will announce tariffs on steel on Monday. [...] All steel arriving in the United States will have a 25% tariff," declared Donald Trump on the presidential plane taking him to New Orleans where the Super Bowl, the final of the American Professional Football League, was being played. The American president also announced that he would apply these same customs surcharges to aluminum imports.

As for the NFP (Non Farm Payrolls) report on the health of US employment in the private sector, it structured the 2nd part of the session all by itself. This health is good, no one doubted it. The issue was elsewhere, it was about gauging the worsening, or not, of the state of tension in the job market, tensions generating inflation.

This report is rather solid, because if job creations (excluding agriculture) come to 144,000, a little below expectations, the increase in the average hourly wage (+0.6%) is intriguing, especially since the target defined by the consensus was +0.4%. Finally, the unemployment rate, expected to be stable at 4% of the working population, falls to 4.1%.

"Overall, underlying numbers are stronger than the hiring disappointment suggests, and the labor market appears to have gained momentum toward the end of 2024 and early 2025. The large upward revisions to population estimates are likely due to immigration in 2024, which, combined with increased wage pressures, could be a restrictive signal for the Fed. Recent trends likely indicate a weaker foreign labor supply, which could lead to further wage increases," said Chris Scherrmann, Chief U.S. Economist for DWS.

In the immediate future, traders have just taken note of the Sentix Eurozone Investor Confidence Index. While the latter has risen above expectations, at -12.6 points, it is still significantly anchored in negative territory. It is the "expectations for the next 6 months" component that is allowing the index to make this progress.

Right now, the EUR/USD is trading at $1.0320.

KEY CHART ELEMENTS
The 50-day moving average (in orange) continues to constitute a solid technical and graphic barrier. In the shorter term, its 20-day counterpart (in dark blue) is acting 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 perfect parity is reached, namely $1 for one euro, an energetic buying reaction of contestation could then take place.

MEDIUM-TERM FORECAST
In view of the key graphical factors that we have mentioned, our opinion is negative in the medium term on the EUR/USD.

Our entry point is at $1.0331. The price target of our bearish scenario is set at $1.0001. To preserve the invested capital, we advise you to position a protective stop at $1.0421.

The expected profitability of this forex strategy is 330 pips and the risk of loss is 90 pips.