EUR/USD: The single currency is already falling back into its old ways

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The Euro regained a little momentum before the inauguration of Dr. Trump at the White House, on press information, suggesting a clearing on the theme of “customs duties” dear to the 47th President of the United States, “cantor “ultra-protectionism…

On Monday, the Wall Street Journal reported that Donald Trump intended to issue a memo ordering federal agencies to investigate trade deficits and unfair trade practices. But, according to the American daily, this document does not provide for the establishment of customs duties from its first day in the White House.

However, the tempestuous new tenant of the White House clearly targeted, initially, its immediate neighbors, Canada and Mexico. “The new American president has not announced figures for China and Europe, for the moment, but he was more precise for Canada and Mexico: “We are thinking of 25% for Mexico and Canada , because they authorize a large number of people” to enter American territory, adding: “I think we will do it on February 1st”, noted Alexandre Baradez (IG France – for whom “the tone is set”.

“Even if he has relatively spared Europe in recent hours, he still made it clear that Europeans were going to have to buy a lot more American oil and gas to fill the trade deficit. He was also less aggressive with China, announcing no precise figures, simply indicating that he was going to “meet President XI and discuss with him”…”

The Wall Street awakening, which remained closed yesterday due to a public holiday, will be monitored by the community of currency traders. Pre-opening data suggests a slightly green start to the session.

In the immediate future, the macroeconomic agenda, deserted yesterday, is expanding a little this Tuesday, with the very popular German “ZEW”. The confidence index in the leading economic power of the Euro Zone, expected to drop slightly to 15.20 points, collapsed to 10.3. “The second consecutive year of recession has lowered economic expectations in Germany,” comments ZEW President Achim Wambach, PhD,

“The year started with a notable decline in the ZEW. This could be due, among other things, to the recently released negative GDP growth figures and growing inflationary pressures. The lack of private household spending and weak demand in construction sector continue to hold back the German economy If these trends continue this year, Germany will fall further behind other Eurozone countries. There is also greater political uncertainty, due to. a potentially difficult coalition-building process in Germany and the unpredictability of the economic policy pursued by the new Trump administration.

At midday on the foreign exchange market, the Euro was trading against $1.0350 approximately.

KEY GRAPHIC ELEMENTS

The 50-day moving average (in orange) continues to constitute a solid technical and graphical barrier. In the shorter term, it is even its 20-day counterpart (in dark blue) which acts as dynamic resistance. And this without the RSI oscillator positioning itself in the oversold zone.

Once perfect parity is reached, namely 1$ for 1€, a vigorous buyer reaction of protest could be put in place.

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 $1.0349. The price target for our bearish scenario is $1.0001. To preserve the invested capital, we advise you to position a protective stop at $1.0501.

The expected profitability of this Forex strategy is 348 pips and the risk of loss is 152 pips.

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