EUR/USD: Trump is anti-bureaucracy, except for customs duties!

The EUR/USD continues its sideways movement, near the short-term moving averages, still amid a thorny customs issue.

The US will impose additional 25% tariffs on all automobile imports starting 3 April. The overall tax will increase to 27.6%. This rate will also apply to trucks and key car parts, such as engines and electrical components. Spare parts will be taxed over a longer period, namely by 3 May. Trump also threatens the European Union and Canada with additional tariffs if they were to coordinate in response to these tariff increases. "Market volatility has been reignited by the tariffs on automobiles," observed UBS.

Trump "claimed that this measure would promote growth in the automotive industry by encouraging companies to establish more factories in the United States," the Swiss bank notes. "However, tariffs could also disrupt supply chains, discourage investment, and significantly increase consumer prices, while risking triggering trade conflicts with Europe, Japan, and South Korea," it adds.

"The uncertainty surrounding trade policy during Donald Trump's second term is unprecedented and exceeds that observed during his first term. This uncertainty is affecting investment decisions, inventory management, and broader economic forecasts, leading to a downward revision of expectations for US growth and thus fueling a negative feedback loop," says Nadege Dufosse, Global Head of Asset Allocation at Candriam.

"Perhaps most worrying is the unpredictable nature of the implementation of these policies, making risk assessment and valuation extremely difficult. Several factors are combining and compounding to create more negative effects, affecting business and household confidence and fueling fears of a "Trumpcession"."

For its part, the euro remains caught between a significant contraction in risk appetite and the positive influence of the sudden loosening of the German fiscal belt.

"Structural changes in fiscal policy in Europe, particularly in Germany, are certainly important factors triggering the upward movement of the single currency. Although the announced plans are still preliminary, they reflect a growing willingness among European leaders to increase military spending in response to the reduction of the United States' commitment to European defense affairs and aid to Ukraine," explains Claudia Panseri, Chief Investment Officer at UBS WM France.

In terms of statistics on Wednesday, investors took note of durable goods orders, which rose sharply on a monthly basis (+0.8%, excluding transport equipment), easily beating the target.

The main event the day before was the sacrosanct Conference Board index of household (read: consumer!) confidence in the US. This is an important benchmark at a time when inflationary fears stemming from Trump's expansionary and anti-immigration policies are weighing on buyer sentiment. The indicator missed expectations, falling from 100 to 93.

Today, there was relatively good news regarding US growth in the fourth quarter, at +0.3% in final data versus 0.2% in the initial estimate. As for weekly jobless claims, they "pointed" at 225,000, perfectly within the consensus target.

Right now, the EUR/USD is trading at $1.0783.

KEY GRAPHIC ELEMENTS
The break above $1.0609 amid significant volatility is a game-changer for the currency pair, which has just validated a resumption of support on the long-term 50-day moving average (in orange), which is initiating a resource pattern. The scenario of a rapid decline towards the perfect parity (1 euro = $1) is invalidated. This consolidation is entering its final phase at the 20-day moving average (in dark blue), against a backdrop of tightening Bollinger Bands.

MEDIUM-TERM FORECAST
In light of the key chart factors we have mentioned, our medium-term view on the EUR/USD is neutral.

We will maintain this neutral view as long as the EUR/USD parity price is positioned between the support at $1.0608 and the resistance at $1.1012.