EUR/USD: A bunch of marco reports to be released today

The euro continued its rebound above its 50-day moving average (in orange) against the dollar, as the greenback failed to gain a decisive advantage following progress on the Sino-American trade front. These concrete advances, however, do not resolve the underlying issue.

As a reminder, for a period of 90 days, Washington will reduce its tariffs to 30% (from 140%), while Beijing will lower them to 10% (from 120%). This reduction "is only temporary," but the market believes "that the worst of the trade war is over and that the trend is toward de-escalation," emphasizes Deutsche Bank.

Be careful, warns Thomas Giudici, head of fixed income at Auris Gestion. "After the disappointment of Liberation Day, the financial markets very (too?) quickly priced in a favorable outcome to the upcoming bilateral negotiations on tariffs."

"Donald Trump will not reverse the very principle of tariffs, and it therefore seems difficult to adopt a more optimistic stance than the one already priced in by the markets. Above all, the concrete effects of the trade war on corporate earnings do not yet seem to be fully at the center of attention."

Furthermore, concerns surround US bond yields, which have been rising for several sessions, regardless of news and general market sentiment.

"We are far from the danger zone of 4.75% on the 10-year bond. But we are getting closer. The market is realizing that Musk's DOGE (the Department of Government Efficiency, supposed to massively reduce spending - Editor's note) has ultimately accomplished nothing and that the US primary deficit will explode in the coming years," explains Christopher Dembik.

Today is the session of the week not to be missed for currency traders, as it brings together a salvo of major US indicators. Today will indeed focus on the bulk of the week's publications, aside from the inflation figures released yesterday. Among this substantial menu, we will therefore have to deal with producer prices, retail sales, weekly jobless claims, the Empire State and Philly Fed manufacturing indices, the monthly industrial report, all complemented by a speech by J. Powell, opening an event organized by the Fed (the second Thomas Laubach Research Conference).

As a reminder, traders learned on Tuesday that US consumer prices rose 0.2% excluding food and energy in April, compared to expectations of +0.3%. This is the lowest rate since February 2021.

"US inflation was lower than expected in April. With the threat of tariff-related price increases receding thanks to recent agreements, and leading indicators from the housing sector pointing to a slowdown in housing costs, the Federal Reserve will continue to consider interest rate cuts later in the year," write ING economists.

Right now, the EUR/USD is trading at $1.1220.

KEY CHART ELEMENTS
The EUR/USD is currently in the process of an important chart test: that of the 50-day moving average (in orange), the last support recovery dating back to the pullback on 28 February. A break of this trendline would release additional selling energy.

MEDIUM-TERM FORECAST
Based on the key chart factors we have mentioned, our medium-term view on the EUR/USD exchange rate is neutral.

We will maintain this neutral view as long as the EUR/USD exchange rate is positioned between the support at $1.1012 and the resistance at $1.1460.