EUR/USD: US 10 years old refuses significantly

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Contrintively, the barometer of the appetite for the risk that constitutes the euro, facing the dollar refuge, appreciated a higher since December 10, then the tensions on the front of geopolitics intensified, as on that of international trade.

First of all, with a freezing of military aid to Ukraine – the American president who has still not digested his altercation with his Ukrainian counterpart on Friday in the Oval Office. And with, on the other hand, the implementation of customs duties this Tuesday 25% for products imported from Canada and Mexico, with the exception of energy. Customs duties on products imported from China are doubled from 10% to 20%.

Both Ottawa and Beijing have decided to retaliate by announcing customs duties in turn. American customs duties on European imports should follow soon.

“The specter of a real trade war is looming again, threatening to stifle global economic growth at the very moment when investors were starting to regain confidence,” said Stephen Innes of Spi Am.

However, despite the inherent risks of a return of inflation across the Atlantic, the American 10 years was clear, the gap being reduced with its bases of comparison in Europe. The Treasuries 10 Years plunged even under 4.15% at a time when we write these lines. And this after a series of disappointing economic indicators since mid-January.

Romane Ballin, bond manager of Auris Gestion, how this relative degradation. “There are many signals: household consumption expenses in the PCE indicator fell in January (-0.5% in monthly shift in volume) and the confidence of consumers of the February Conference Board was released at 98.3 (vs 105.3 in January). The economic dynamics thus appear more and more fragile: the GDP Now indicator of the Atlanta Fed GDP in the 1st quarter of -1.5% in annualized rhythm! Even if a large part of this negative figure comes from the recent degradation of the trade balance upstream from the formalization of customs duties, it is not excluded that the Fed ultimately opts for a more accommodating monetary policy than expected … which would not be to displease a certain D. Trump … “

As a reminder, the United States remains on a series of disappointing economic statistical indicators. The Consumer Confidence Index (Conference Board) is in particular ironed below 100 points, supporting the scenario of an inflection point in the American economy, whose health is still very good. But a succession of indicators (retail sales, U-Mich, or even the PMI barometers) suggest a very slight cooling of the economic machine, which the application of duties of suddenly raised could seize more.

On Monday, the trades learned of the PMI Manufacturer in final data for February, at 47.6 points slightly above expectations thanks to a German component which pleasantly surprised at 46.5, although clearly below 50 points.

“The latest PMI data highlights the beginnings of an improvement in the first quarter environment: new orders have indeed displayed their lowest decrease since May 2022 and production has come closer to stabilization. Thus, after almost three years of recession, it seems that the sector can return to very slight growth in the coming months, trend that should promote the rapid constitution of a government in Germany More stable in France and an agreement on customs tariffs with the United States, “said Dr. Cyrus de la Rubia, chief economist at the Commercial Bank Hamburg.

In addition to the Atlantic, the PMI ISM emerged at 50.3, very close to the 50-point barrier which by construction, separates a contraction (below) from an expansion (above) of the sector considered.

On this side of the Atlantic, the European Central Bank will complete this week a new council of governors. The German asset management company DWS expects that “the European Central Bank (ECB) will once again lower its deposit rate of 25 base points to bring it to 2.50 % in March, thus marking its sixth consecutive decline. However, the room for maneuver for new rapid reductions seems to be limited. The opinions within the ECB are increasingly shared on the number of rate to come in the coming month, Their pace of application and the question of whether the current monetary policy is already restrictive. “

The Central Bank based in Frankfurt will be able to base itself on the latest consumer prices indices published yesterday. The prices excluding volatile elements came out in February up 2.6% at an annual rate, against a consensus at 2.5%. Nomura economists have brought the following insights:

“The inflation of the services fell to 3.7 % in annual sliding, its lowest level for two and a half years. However, the prices of the services have increased and, in the last three months, they have progressed at a rate which would be too high for basic inflation to reach 2 %.”

“This could play in favor of those who, within the ECB, wonder how far interest rates can descend. We continue to provide rates to 1.75 % by September, that is slightly below our objective of neutrality. But this would require weaker news concerning IPCH. Inflation will remain at the heart of our concerns in the coming months.”

Published at the end of the morning by Eurostat, the unemployment rate in the euro zone, expected stable to 6.3%, died down 6.2% of the active population.

At midday on the foreign exchange market, the euro was treated against $ 1,0510 approximately.

Key graphics elements

The continuous 50 -day (in orange) mobile average constitutes a solid technical and graphic barrier. In the shorter term, it is even his counterpart at 20 days (in dark blue) that officiates as a dynamic resistance. And this without the RSI oscillator positioning itself in the occurrence zone. In the immediate future, the pair of currencies traces, in the upper part of the Bollinger bands, a negative structure in harami. Once the parity is perfect, namely $ 1 for a €, an energetic buyer of protest can then be set up.

Medium term

In view of the key graphic factors that we have mentioned, our opinion is negative in the medium term on Euro dollar parity (Eurusd).

Our entry point is 1.0557 USD. The price of course in our lowering scenario is 1,0001 USD. To preserve the committed capital, we advise you to position a protection stop at 1,0701 USD.

The profitability hope of this Forex strategy is 556 pips and the risk of loss is 144 pips.

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