EUR/USD: A well-defined technical framework

The euro remained at the top of its range (a sideways channel), in a foreign exchange market aware of the continued appetite for risk, particularly in US equities, while continually questioning the outcome of Trump's trade war against the rest of the world.

Foreign exchange traders, digesting the ECB Governing Council, took note of a solid federal employment report for May.

Here are the main takeaways: first, the unemployment rate remained stable at 4.1% of the labor force. Average hourly wages rose slightly more than expected (+0.2%), and, above all, job creation in the private sector, at 140,000, above expectations, completes the solid employment picture.

This puts the somewhat alarmist publication from ADP earlier in the week into perspective. And above all, it will ease the pressure on Jerome Powell, who has been under presidential pressure to ease interest rates since the beginning of Trump's term.

The latest major development, in addition to the "constructive" blow between Trump and Xi Jinping, is the decision of the US Trade Court to declare the application of tariff surcharges by government decree unconstitutional, since these are administered by Congress.

"While the White House trade advisor stated that the administration "will seek to enact tariffs through other means," the alternative options remain limited. Certainly, certain legal provisions allow the President to act, but they are strictly regulated, targeted, and generally require prior investigations to be justified. As for a vote in Congress, it seems unlikely given the narrow Republican majority in both chambers. These developments suggest that the worst is likely behind us regarding tariffs. However, the uncertainty will persist for many more months and could force companies to wait before making any decisions," explains Thomas Giudici, head of fixed income management at Auris Gestion.

Statistically, the final data on US wholesale inventories will be released at 16:00 (EU time). The big event of the week for currency traders will undoubtedly be Wednesday with the release of inflation figures across the Atlantic, in the consumer price index sense.

Right now, the EUR/USD is trading at $1.1396.

KEY CHART ELEMENTS
The currency pair is currently passing the highly important chart test of the 50-day moving average (in orange). A breather is needed before setting new highs. This means the formation of several support points on this trendline. We currently have two.

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

We will maintain this neutral view as long as the EUR/USD is positioned between the support at $1.1202 and the resistance at $1.1460.