EUR/USD: Trump tramples the independence of the Fed

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The dollar remained under pressure during the trade war led by Washington against the rest of the world, and especially against Beijing. It was with this trade war that the Council of Governors of the European Central Bank had to deal with last week. Meeting which ended without surprise with a drop of 25 base points of the main key rate, the “rent” of the euro.

“Unlike the March Declaration, there is no evaluation indicating that monetary policy is” significantly less restrictive “. According to the president Lagarde, attributes such as” restrictive “or” neutral “are not useful for characterizing monetary policy, because, in a world filled with shocks, monetary policy must be calibrated to achieve the objective of stability of sustainable prices. Ulrike Kastens, Senior European economist from DWS

“With regard to financial stability, it stressed the fundamental importance of the independence of the European Central Bank”.

On the other side of the Atlantic, it is precisely this question of the independence of the Central Bank, the Fed, which is more than ever asked. D Trump, shamelessly, tramples this independence, however guaranteed by law.

Donald Trump attacked the boss of the American central bank on Monday again on Monday, which he dealt with “huge loser”, while the persistent tensions between the American president and Jerome Powell already worry the markets.

“There may be a slowdown in the economy unless ‘sir too late’, a huge loser, drops interest rates, now,” wrote Donald Trump on his social social network, in a transparent reference to the chief of the Fed.

The American president believes that Jerome Powell should take an example from the European Central Bank which “has already dropped seven times” its rates. He also accused the boss of the Fed of acting in a political manner. He threatened to dismiss him while the mandate of the central banker runs until May 2026.

“While the potential risks for the independence of the Fed had already made the headlines in recent weeks, the market movements of yesterday (Monday, note) were the most clear sign to date of the anxiety of investors on the subject,” said Deutsche Bank.

“The dismissal of the president of the Fed before the end of his mandate in May 2026 could question the ability of the central bank to set interest rates without political interference, and therefore prices prospects,” notes Mark Haefele, director of investments, at UBS Global Wealth Management

At the macroeconomic agenda this Tuesday, to follow the manufacturing index of the Fed de Richmond at 4:00 p.m. To follow also this afternoon, an interview with C Lagarde, president of the ECB, on CNBC. The agenda will be densified tomorrow with precious benchmarks: PMI activity barometers in preliminary data for the current month, on both sides of the Atlantic. The only German industrial component is expected in contraction at 47.5.

At midday on the foreign exchange market, the euro was treated against $ 1,1490 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 1,1494 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 1,1339 USD.

The profitability hope of this Forex strategy is 476 pips and the risk of loss is 155 pips.

Daily data graphics