EUR/USD: a little concrete in the trade war

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The euro continued its consolidation phase on the last part of a week marked by the displayed prudence of the Fed, and by “concrete” on advances in the trade war that, beating drum, Trump against the rest of the world. After playing upside down, then in poker, the “Tsar” of the White House takes out its “Risk” game box to carry out its pricing negotiations …

At the heart of the week, the Fed decided to maintain its main key rate (the “rent” of the dollar) in a range between 4.25% and 4.5%, While insisting on rising risks on inflation and unemployment. This is the main teaching of this meeting of the Monetary Policy Council: the prudence shown by the monetary institution, in an economic environment marked by the still uncertain consequences of the intense trade war.

The burners also appreciated the trade agreement signed yesterday between London and Washington, while preliminary discussions between American and Chinese delegations are looming in Berne, Switzerland. What to distance, in the rooms of the markets, the cataclysmic feeling which prevailed in the aftermath of the “Liberation Day”. Recall that the VIX, the index of fear, has gradually cooled up to rating 22.48 points at the last rating of the S & P500. It was worth 52.33 on April 9.

The prospect of a clarification in the customs sky has relegated to the background the announcements of the Bank of England (BOE), which lowered its main rate of 25 base points on Thursday (0.25 percentage points) to 4.25%.

“The Bank of England has lowered its levels by a quarter of a point, but has not confirmed market expectations concerning faster rate reductions. Our basic hypothesis is that the bank continues to reduce its rates once a quarter, although we do not exclude a faster rate of reduction if we are right to say that the inflation of services decreases faster than the BOE is currently providing for it.”

In the statistical chapter, “RAS” concerning new weekly registrations for unemployment benefits in the United States, at 228,000, very close to past week, and expectations. This morning have just been published the monthly industry production data in Italy, the third economic power in the euro zone. They only increased in March 0.1%, against expectations much more optimistic at +0.4%.

At midday on the foreign exchange market, the euro was treated against $ 1,1250 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 objective $ 1,1970, in the long term.

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 1,1202 USD and the resistance to 1,1460 USD.

Daily data graphics