EUR/USD: Dynamic support is disrupted by the markets

For the first time since 27 February, the leading currency pair closed a candlestick below its 50-day moving average (in orange), which had previously served as a chart support. The trade deal signed between Washington and Brussels remains difficult to digest on foreign exchange markets, with traders reflecting the agreement's imbalance in their decisions.

This trade agreement reduces the tariffs imposed by the United States on European imports to 15%. Without an agreement, Washington would have imposed tariffs of 30% on Europe starting 1 August.

This agreement, described as the "biggest" trade deal ever by Donald Trump, includes several exceptions, with products subject to zero tariffs from both trading partners, including aircraft equipment, semiconductor equipment, and certain agricultural products. But not alcoholic products, whose fate must be decided "in the coming days," Ursula von der Leyen indicated.

The text also provides for Europeans to purchase $750 billion worth of energy products from the United States and invest an additional $600 billion in the country.

"Why so many gifts to the Americans?" asks independent economist Veronique Riches-Flores, indignantly. "The EU's trade surplus with the United States has grown disproportionately in recent years," says widely hated Ursula von der Leyen, President of the Commission and EU negotiator, who agrees with Trump and thereby forgets that the US compensates for a large part of their goods deficits with comfortable surpluses in services.

"So, yes, 15% is still better than 30% or 50%, and investors will likely applaud this relief, or at least pretend to. Because who can consider what is presented as an agreement anything other than a racket for which the Europeans will pay both the economic price and the even more bitter humiliation of no longer knowing how to do anything but submit to dictates and unfairness. All this is hardly inspiring for the European future. Donald Trump is jubilant. How could it be otherwise! Europe, for its part, probably hasn't finished crying," concluded the economist.

Forex traders will also have a lot to do this evening, deciphering the language in the Fed's statement concluding a meeting of the Monetary Policy Committee. There's nothing to expect in terms of the Fed Funds rate, which is expected to remain stable, but there is some uncertainty regarding the monetary trajectory through the end of the year.

The CME Group's FedWatch tool puts the probability of a status quo at 97%, much to the dismay of Donald Trump, who continues to rant about his demand for a drop in key interest rates, repeatedly calling the Fed chief a "fool"...

"Faced with this inaction, the President's advisors have increased their pressure on Jay Powell, accusing him of mismanaging the renovation of the Federal Reserve headquarters for the modest sum of $2.4 billion. This argument doesn't seem to have resonated with investors, according to the betting site Polymarket: the probability of a departure this year is only 19%," emphasizes Pierre Pincemaille, Secretary General of Management at DNCA Finance.

"In defense of the Fed and its chairman, the mission of controlling inflation seems rather difficult. Indeed, the two major components of this economic equation (customs tariffs and businesses) are not set in stone. After concluding trade negotiations with Europe, the US administration now seems to be targeting Southeast Asian countries that are used to circumvent tariffs imposed on China. The average effective rate, which rose from 2.2% at the beginning of the year to 12% currently, is therefore still subject to change."

On the statistical front, on Tuesday, traders received data on employment with new offers (JOLTS), slightly below expectations. However, the consumer confidence index (Conference Board) rose to 97.1, well above the target, confirming the excellent health of domestic consumption, structurally the primary driver of national wealth creation in the US. On the macroeconomic agenda this Wednesday, key highlights in the US include the results of the monthly ADP employment survey at 14:30 (EU time) and the Fed press conference at 20:30.

No changes were made to German GDP, published this morning, which contracted by 0.1% in the first quarter, perfectly in line with the consensus formed by initial estimates.

Right now, the EUR/USD is trading at $1.1441.