EUR/USD: Will the Trump customs officer finally be less severe

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Very sharp rebound in protest on the Euro/Dollar currency pair this Monday, in the wake of press information suggesting that the customs tariffs imposed by D Trump could be less severe than initially expected.

As a reminder, the American president-elect plans to introduce customs surcharges of 60% on Chinese imports as well as “universal duties” of 10% to 20% on those from other countries. The Washington Post indicated this Monday that these “universal” customs duties could be restricted to certain sectors and would thus only cover “critical imports”.

The American media, which relies on three anonymous sources, writes that the exact list of industries which would be affected is not clearly established at present. But it could encompass the logistics chain of defense activities, medical equipment or even energy-related components.

Enough to make the single currency jump by more than 1% against the Dollar, two weeks before the inauguration of the 47th President of the United States.

In terms of statistics this Monday, no deviation from the target is to be reported, whether for the final services PMI data in the Euro Zone (51.6) or the Sentix investor confidence index (-17.7). .

In terms of statistics on Friday, currency traders reacted to better than expected manufacturing activity in December. The ISM manufacturing index (often considered more relevant than the PMI index) stood at 49.3 in December compared to the consensus 48.4 and after 48.5 in November. But for all that, American manufacturing activity continues to deteriorate since the threshold of 50 marks the border which separates contraction and expansion of activity.

At midday on the foreign exchange market, the Euro was trading against $1.0420 approximately.

KEY GRAPHIC ELEMENTS

The jump experienced by the currency pair on Monday January 6 is not likely to counter the underlying bearish bias, but sends a legitimate message of protest. The 50-day moving average (in orange) continues to constitute a solid technical and graphical barrier.

MEDIUM TERM FORECAST

Considering the key graphical factors that we have mentioned, our opinion is negative in the medium term on the EURUSD parity.

Our entry point is at $1.0422. The price target for our bearish scenario is $1.0001. To preserve the invested capital, we advise you to position a protective stop at $1.0556.

The expected profitability of this Forex strategy is 421 pips and the risk of loss is 134 pips.

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