EUR/USD: The end of the Trump Trade weighs on the dollar

(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 euro continued its movement of lateral consolidation in the face of the dollar, with the support of the prospect, now clear, to see Germany exploding its budgetary lock, its famous golden rule.

“The structural changes in fiscal policy in Europe, more particularly in Germany, are surely important factors that have triggered the Haussier Movement of the single currency” sheds light on Claudia Panseri, Chief Investment Officer at UBS WM France. “Although the announced plans are still preliminary, they reflect an increasing desire for European leaders to increase military spending in response to the reduction of the United States’s engagement in European defense affairs and help from Ukraine.”

Bover also keeps an eye attentive to the date of April 02, and the entry into force, possibly, of new customs taxes at the entrance to American territory. And this on the principle of reciprocity. According to the Wall Street Journal, some sectors could be excluded from these customs surcharges.

“The wait-and-see attitude will dominate before the announcement by Donald Trump, on April 2, of reciprocal customs duties potentially followed by retaliatory measures from the trade partners of the United States”, sums up César Perez Ruiz, head of investments and CIO at Pictet Wealth Management, which is a key moment of week, this Friday, March 28 with the publication of the preferred measure Price dynamics: “Basic PCE inflation, the Fed anticipating a delay in the disinflationary trend this year, partly due to customs duties. In the perspective of April 2-the” Liberation Day “according to Donald Trump-, the European Union has postponed its 50% customs duties in mid-April on American whiskey, which leaves a margin of negotiation.”

In short, the end of the Trump Trade weighs on the dollar, the very powerful character of currency of international trade is questioned.

“The election of Donald Trump had aroused a certain euphoria in the American markets fueled by the expectations of pro-corporate policies (measures of deregulation and accommodating tax policy). These measures suggested solid economic prospects for an American economy which already benefited from solid growth of more than 2 %, forecasts of disinflation and reduction of the Fed. was quickly cooled by a mandate where Donald Trump has mainly emphasized measures deemed rather negative for American growth: increase in customs taxes, reduction in federal spending or drop in immigration, “notes Alexandre Drabowicz, Global Chief Investment Officer at Indosuez Wealth Management.

In the statistical chapter, the operators learned of the IFO index of the business climate in Germany, released slightly at 86.7, very close to the target. The economic cycle matrix tool clearly shows a trajectory of the “crisis” box to the “recovery” box.

But Tuesday’s big date on the statistical component was the sacro-saint of household confidence confidence confidence index (understanding: consumers!) Overseas. An important benchmark at a time when inflationary fears of Trump’s expansionist and anti-immigration policy weigh on the morale of buyers. The indicator missed expectations, going from 100.1 to 92.9.

“Consumer confidence fell for the fourth consecutive month in March, passing under the relatively narrow range which has been prevailing since 2022,” said Stéphanie Guichard, a world’s chief economist, to the Conference Board. “Among the five components of the index, only the evaluation by consumers of the current labor market situation has improved slightly. Their opinions on the current economic situation have weakened, close to neutrality. Consumer expectations were particularly pessimistic, pessimism as to the upcoming economic conjuncture and confidence in employment prospects falling at its lowest level for 12 years. Consumers about their future income, who had maintained themselves quite securely in recent months, has been largely faded, which suggests that concerns about the economy and the labor market have started to spread in the evaluation of their personal situation. “

To be continued at 1:30 p.m. orders for lasting goods in the United States.

At midday on the foreign exchange market, the euro was treated against $ 1,0790 approximately. The dollar index remained stable under 104.

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. This consolidation comes in terminal phase in contact with the mobile average at 20 days (in dark blue), on the tightening background of Bollinger strips.

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