EUR/USD: The Fed is ready to sail in sight

(BFM Stock Exchange) – This article, with free access, is produced by the research team in BFM Stock Exchange analysis and market strategy. To not miss any opportunity, consult all of the analyzes and discover our portfolios by accessing our privilege space.

The showdown between Euro and Dollat ​​continued above the $ 1.09 for a € Tuesday, on the eve of the FED FOMC, a meeting made complicated by the lack of visibility combined on the macroeconomic, geopolitical and political fronts. If a status quo on the rates proper is almost acquired, the elements of language used, as well as the updating of economic forecasts will have passed under the microscope.

“Will Donald Trump continue his brutal approach or on the contrary, in the face of shielding and the first economic consequences of his decisions, will he put water in his wine? When he speaks of a transition phase, accept the prospect of a slowdown, even a recession? All these questions should be addressed during the meeting of the federal reserve”, List Emmanuel Auboyneau upstream of the FOMC.

“The message delivered by Jerome Powell will be interesting to decipher and will give the trend for the future. It should probably remain cautious and reserve all the future room for maneuver. No decision decision should be announced at this meeting.”

Do nothing, so, yes but do it well! That is to say by sending reassuring messages, showing that the institution has all the appropriate navigation tools, and that it can even navigate “in sight” if necessary!

Thomas GIUDICI, head of bond management of Auris Gestion, sums up the situation for tomorrow. “In this ambient fog, Jerome Powell and the Fed, relegated to the background, can savor this welcome respite. Between inflation figures better than expected in February but still close to 3%, the still unknown impact of customs duties on inflation and growth as well as an American economy in slowing but resilient, it is urgent to do nothing. its monetary policy meeting.

The decision for rates will be known tomorrow 7:00 p.m., with the updating of economic forecasts. The press conference will follow at 7:30 p.m.

For its part, the euro remains supported by the now clear perspective to see Germany break the rule of budget.

The future chancellor Friedrich Merz has reached an agreement with the Greens which should allow the mega investment plan (around 900 billion euros) in defense and infrastructure to be adopted. With the support of environmental deputies, the leader of the Conservative Party is strong by a majority of two thirds necessary for constitutional changes and soften the rules of indebtedness across the Rhine. Which is a prerequisite for this plan to be implemented. The text will be submitted to a vote next Tuesday at the Bundestag, before passing through the hands of the Bundesrat.

At the macroeconomic agenda this Tuesday, to follow in priority American industrial production at 2:15 p.m.

It should be noted that the east coast of the United States has passed in the summer hour. Consequently, and while waiting for mainland France in turn, Wall Street will open at 2:30 p.m., instead of 3:30 p.m. usually.

At midday on the foreign exchange market, the euro was treated against $ 1,0930 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 1,0758 USD and the resistance to USD 1,1012.

Daily data graphics