EUR/USD: The Minutes will be published shortly

THE major meeting for foreign exchange traders this Wednesday is undoubtedly the publication at 20: (EU  time) of the traditional Fed "Minutes", the chronological report of the debates that animated the last FOMC (Monetary Policy Committee). The ideal opportunity to measure the forces present between hawkish and accommodative executives, to refine the projections of rate cuts this year. For the moment, a scenario with a single rate cut, of 25 basis points of the Fed Funds, is widely anticipated, due to the strength of the American economy, the tensions on employment and the inflationary risks induced by Donald Trump's interventionist policy, particularly on the customs front.

It must be said that "trade and migration policies in the United States are associated with an increase in inflationary risk. Customs duties could lead to an increase in the prices of goods, both directly, if retaliatory measures against the United States increase import costs, and indirectly through disruptions in the supply chain. Only a generalised and lasting increase in customs duties would have a significant impact on inflation", according to Claudia Panseri, Chief Investment Officer at UBS WM France.

"In any case, rates are tightening across the Atlantic. From now on, the markets are only anticipating a single rate cut by the Fed in 2025, while Donald Trump has been campaigning for several months for more rate cuts by the FED," according to Greg Kowski, Investment Strategy Advisor at Norman K.

To follow at 14:00, an interview with D Trump and E Musk on Fox News and at 20:00 the Minutes of the last FOMC. Yesterday, traders took note of the German ZEW index, an index of confidence in the Eurozone's leading economy. The barometer is up at 25 points.

"As the federal elections approach, economic expectations have improved significantly in February. This growing optimism is probably due to the hope of a new German government capable of acting. In addition, after a period of lack of demand, private consumption is expected to pick up again over the next six months. And the ECB's decision to cut interest rates in response to weak economic activity in the monetary union has probably contributed to the improved outlook for the construction sector," comments Achim Wambach, President of the ZEW Institute.

Right now, the EUR/USD is trading at $1.0428.

KEY CHART ELEMENTS
The 50-day moving average (in orange) continues to constitute a solid technical and graphical barrier. In the shorter term, its 20-day counterpart (in dark blue) is even acting as dynamic resistance. And this without the RSI oscillator moving into the oversold zone. For the time being, 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 $1.0420. 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 forex strategy is 419 pips and the risk of loss is 189 pips.