EUR/USD: a council of governors struck by the trade war

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The euro continued to gain its height – or your choice, the dollar continued to suffer, in a context of intense and uncertain trade war, where the lines are moving according to the alleged instinct of Donald Trump … This Thursday, the European Central Bank (ECB) will have the heavy task of completing its council of governors under these flooded market conditions …

Maxime Mura, IG Rate and Credit Manager of SWISS Life Asset Managers France expects “a drop of 25 basis points in the euro zone, like the market consensus. In January, we already drop in April, as well as each monthly meeting until the start of the September school year while the market consensus provided for a break for this month before reviewing its forecasts.”

It must be said that the procrastination, the voltages and other strokes of Trump in his trade war complicates the equation of the major central banks.

“The upheavals of the past few weeks are in fact reinforced by the monetary relaxation cycle initiated by the major central banks. The recent decisions of Donald Trump also lift a doubt for the European monetary institution based in Frankfurt which hesitated to continue its monetary relaxation program in the event that the Fed has stopped its own. But the announcements of the Trump administration should fuel a strong instability Across the Atlantic (2% of American GDP could be deducted from private players) and the Fed should be forced to continue its rate reductions despite inflationary tensions. “

The comments of Christine Lagarde on the place of the euro zone in the current redefinition of the DNA of the world trade will be analyzed by the traders. If the monetary decision proper is expected at 2:15 p.m., the press conference will start at 2:45 p.m.

“This meeting of the European Central Bank will be held in a very uncertain context given the turbulence that the political decisions of Donald Trump and his reculades have brought. A strict application of customs duties as mentioned by the American president would have a recessive impact in the United States but also in Europe. It is above all the confidence of economic agents which is threatened. However, without confidence, less consumption and less investment … Inflationary rebound that the United States, which therefore gives more latitude to the Central Bank, “deciphers Emmanuel Auboyneau, associate managing at Amplegest

“The backtracking of Donald Trump and the start of negotiations make the situation less anxiety -provoking even if it remains a lot of uncertainties at this stage. The international situation forces Europe to reinvent itself and, at least temporarily, get out of its budgetary dogmas. Germany has voted a recovery plan on the infrastructure and the arms of 500 billion euros over the coming years. committed.

The alter ego of Ms. Lagarde, Jpowell, president of the Fed, spoke yesterday before the Economic Club of Chicago, acting a start of slowdown in growth, emphasizing the impact of customs duties, even if the latter are not yet stabilized, negotiations being in progress with many commercial “partners”. The most outrageous escalation is on the Sino-American front, with taxes on certain imports that can go as far as … 245%!

At the macroeconomic agenda this Wednesday, to follow in priority the monetary policy decision of the ECB at 2:15 pm (press conference at 2:45 pm), as well as weekly registrations for unemployment benefits and the “Philly Fed” index, across the Atlantic, at 2:30 pm. The main meeting on Wednesday was the publication of retail sales, emerged up 0.5% monthly, slightly beyond expectations.

At midday on the foreign exchange market, the euro was treated against $ 1,1375 approximately.

Key graphics elements

Consolidation in triangle from 04 to 09 April is now over, the pair of currencies being violently out from the top. The energy released is important, but the ease with which the Eurusd shatters the resistances augurs for a pursuit of height. An accumulation zone between 1,1460 and 1,1674 is identified, as well as a bullish lens $ 1,1970.

Medium term

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

Our entry point is 1,1375 USD. The course of course in our Haussier scenario is 1,1970 USD. To preserve the capital committed, we advise you to position a protection stop at 1,1179 USD.

The profitability expectation of this Forex strategy is 595 pips and the risk of loss is at 196 pips.

Daily data graphics