EUR/USD: the dollar regains composure after Trump's speech

The dollar recovered some ground after Trump softened his stance on the thorny Greenland issue. The orange-clad occupant of the White House lifted his threats of tariffs against countries opposing his views on Greenland, asserting that he and NATO Secretary General Rutte had outlined the contours of an agreement. Mr. Rutte, surprised by this, immediately stated that sovereignty issues had not yet been addressed. He warned that there was still "a lot of work" to be done to reach an agreement.

"I don't want to use force to annex Greenland," he said earlier, while assuring everyone that his army would be "unstoppable" if force were to be used. "But I won't..." The President of the United States compared Greenland to a "piece of ice" - its inhabitants will appreciate that! - which he needs to ensure world security (read: American economic interests).

"The New York Times reported that a compromise option discussed within NATO earlier today envisions the United States taking control of small areas of Greenland to establish military bases, with Axios specifying that the proposal will respect Denmark's overall sovereignty over the island," writes Deutsche Bank.

Thus, even if it is not yet known exactly what concessions the United States will obtain, these appear to have been considerably reduced compared to Trump's recent demands for 'complete and total control' of the "Greenland," the bank continues.

In any case, and regardless of the very short-term effect on equity and currency markets, a transatlantic diplomatic link is now broken, at least as long as Donald Trump or his potential successors in the White House who endorse the "MAGA" doctrine remain in power.

Gregoire Kounowski, Investment Advisor at Norman K, observes "the growing gap that now separates the United States from Europe." Speaking from the podium, Canadian Prime Minister Mark Carney also referred to an America that "is no longer trustworthy," just days after concluding a trade agreement with Xi Jinping's China, which he deemed "more predictable than the United States." As for the Europeans, they ended 25 years of negotiations to sign a free trade agreement with Mercosur. Washington's historical allies are now prioritising their independence, at the expense of asymmetrical trade relations subject to the whims of a single individual.

Today was the focus of the week's major US macroeconomic releases, including, among other things, the final GDP figures, weekly jobless claims, PCE prices, household income and spending, and crude oil inventories.

Right now, the EUR/USD is trading at $1.1743.

KEY TECHNICAL ELEMENTS
We are resuming our long positions on the EUR/USD after the strong rebound at the beginning of this week off the 200-day moving average (in brown). Post-rebound volatility is a key factor supporting the bullish scenario.

MEDIUM-TERM FORECAST
Based on the above key technical factors, our outlook for the EUR/USD is positive in the medium term.

Our entry price is $1.1716. The price target for our bullish scenario is $1.2465. To protect your capital, we advise placing a stop-loss order at $1.1459.

The expected profit for this strategy is 749 pips, and the potential loss is 257 pips.