EUR/USD: at the highest since 11/11

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The euro ironed the $ 1,0608 in significant volatility, the dollar being penalized by the envisaged consequences of a large -scale trade war. Recall that customs duties up to 25% on import products from Canada and Mexico entered into force yesterday. Even if operators feed the hope that an agreement can be reached between Washington and its immediate neighbors.

“Many believe that they will be at least partially lightened (reduced rate and/or specific exemptions) in the coming weeks. As the evolution of the trade war progresses, investors will reassess their anticipations in terms of customs duties, which could cause persistent volatility of the markets”, analysis Joshua Jamner, senior analyst in investment strategy at Clearbridge Franklin Templeton).

And this while the United States, since mid-January, have been on a series of relatively disappointing macroeconomic indicators, at least significantly in expectations. The Consumer Confidence U-Mich index and retail monthly sales are very representative examples. Anxiety therefore rises from a notch while the publication of the monthly federal report on private employment (excluding agriculture), on Friday, the famous NFP.

“US employment figures for February will be observed closely this Friday. The latest American statistics, especially those on consumer confidence, question. This will be an opportunity to know whether or not to worry about the United States,” said Christopher Dembik, investment strategy advisor at Pictet AM. By then, at 14:15 am this Wednesday will be offered to investors the conclusions of the AdP (Automatic Data Processing).

For its part, the single currency, which had touched an unprecedented high point since November 11 against the dollar, took advantage of the hope of a substantial progression of public expenditure in Germany. The Conservatives (CDU/CSU) and the Social Democrats (SPD) announced that they had reached an agreement for the creation of an infrastructure fund of several hundred billion euros. In addition, the “golden rule” of the debt brake will be deeply modified, in particular to invest massively in the defense. Currently, this rule limits the federal budget deficit to 0.35%.

The prospect of a debt brake reform leads to a surge in yields of sovereign bonds. The 10 year old German is reaching 21 base points to 2.698% while the rate at 30 years is on the way to knowing its highest increase in a day since October 1998, according to Reuters.

In the statistical chapter this Wednesday, if the PMI services in final data for February hardly depart from the first estimates, at 50.6, the prices for production in the euro zone jumped 0.8% in the euro zone in a monthly rate, exploding the target by 0.3%.

Figures that should somewhat rebalance the debates in the Council of Governors which ends tomorrow. “Even if some discordant voices are now heard, the ECB should once again lower its key rate of 25 base points at the meeting on March 6. Inflationist data remains reassuring and economic activity is always low, thus justifying this monetary easing”, for Emmanuel Auboyneau, associated managing at Amplegest.

At midday on the foreign exchange market, the euro was treated against $ 1,0690 approximately.

Key graphics elements

The crossing in significant volatility of $ 1,0608 changes the situation on the configuration of the currency pair, which has just validated a resumption of support on a long mobile average, at 50 days (in orange), which begins a resource figure. The scenario of a fast melting towards the perfect parity (€ 1 = $ 1) is invalidated.

Medium term

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

We will keep this neutral opinion as long as the EURO Dollar parity prices (EURUSD) are positioned between the support at 1,0448 USD and the resistance to 1,0758 USD.

Daily data graphics