EUR/USD: The surge is already running out of steam

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Have those close to D Trump cleverly distilled false leads to see how the market would react? In any case, the future tenant of the White House delivered one of his famous “Fake news!” in reaction to press reports suggesting that the customs tariff policy imposed by the next administration would be less violent than anticipated.

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. However, The Washington Post indicated on 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.

In the wake of this information, the Euro, driven by a renewed appetite for risk, confirmed its rebound against the lower limit of the Bollinger bands (in light gray), before confronting pressure this Tuesday of the 20-day moving average (dark blue).

In terms of statistics this Monday, inflation in the Euro Zone, as a first estimate for the month of December, was stable at +2.7% at an annual rate, excluding food, energy, alcohol and tobacco. To be continued at 4:00 p.m. across the Atlantic, ISM Services and the new JOLTS job offers, one of the first previews scheduled this week on the health of employment, before the publication of the NFP report on Friday.

At midday on the foreign exchange market, the Euro was trading against $1.04 approximately.

KEY GRAPHIC ELEMENTS

The reaction movement carried out at the end of last week, encouraged on Monday by press information denied by D Trump, is already running out of steam.

This surge 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 $1.0403. The price target for our bearish scenario is $1.0001. To preserve the invested capital, we advise you to position a protective stop at $1.0541.

The expected profitability of this Forex strategy is 402 pips and the risk of loss is 138 pips.

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