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The forces were balanced in the very short term, near the 50-day moving average (in orange), a heavily bearish trend line, on the flagship currency pair. Forex traders continued to dissect the latest shock announcements from the new tenant of the White House, while already looking ahead to the next Council of Governors of the European Central Bank, which will end on Thursday January 30, in exactly one week.
D Trump threatened to target the European Union and impose 10% customs duties on imports from China, “probably” starting February 1. Which, however, is still quite far from the 60% previously mentioned during the presidential campaign. Hence a continued rise in luxury values, such as LVMH (+1.78%), Hermès (+2.15%) and L’Oréal (+2.48%).
Donald Trump also announced the “Stargate” project, a joint venture between Softbank, OpenAI and Oracle. This new company intends to develop the infrastructures necessary for the development of artificial intelligence, in particular data centers. It plans initial investments of $100 billion which must then increase to $500 billion.
On the aspect of European monetary policy, the “context [économique] allows the ECB to further reduce the deposit rate by 25 basis points, to 2.75%”, for Ulrike Kastens, European Economist, which is based on the dichotomy with the health of the American economy.
“Since the last ECB meeting in December, the data situation in the Eurozone has not changed much. Economic indicators continue to signal rather weak growth in the coming months. As expected, the inflation rate continued to rise through the end of 2024. However, inflation projections also show increased confidence that the rising cost of living will sustainably move closer to the inflation target.”
On the macroeconomic agenda this Thursday, to follow as a priority, at 2:30 p.m., the weekly registrations for unemployment benefits in the United States.
At midday on the foreign exchange market, the Euro was trading against $1.0410 approximately.
KEY GRAPHIC ELEMENTS
The 50-day moving average (in orange) continues to constitute a solid technical and graphical barrier. In the shorter term, it is even its 20-day counterpart (in dark blue) which acts as dynamic resistance. And this without the RSI oscillator positioning itself in the oversold zone.
Once perfect parity is reached, namely 1$ 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 $1.0412. The price target for our bearish scenario is $1.0001. To preserve the invested capital, we advise you to position a protective stop at $1.0531.
The expected profitability of this Forex strategy is 411 pips and the risk of loss is 119 pips.
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