EUR/USD: Moody’s penalizes (slightly) the dollar

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Buyer and sellers continued to balance the pair of Euro / dollar currencies in the very short term, in a foreign exchange market which wonders about the deep consequences of the trade war, even if concrete advances are to be noted between Washington and respectively, Beijing and London. The euro, however, returned to a few pipswithout taking the advantage, in the wake of the announcement of a degradation of the sovereign note of the United States by the Moody’s agency.

“After a little euphoria following the announcement of the drop in prices between the United States and China, from prohibitive levels and the 90-day break to continue to negotiate, it seems that ‘fatigue’ wins risk taking,” said Xavier Chapard de LBPAM. “This seems reasonable in front of the great uncertainties that still have to dissipate to apprehend the future imposed on us by the United States. The fact that the worst may have been avoided, does not mean that we come back to the world of yesterday,” he adds.

“Donald Trump will not come back to the very principle of customs duties and it seems difficult to adopt a more optimistic posture than that already integrated by the markets. Above all, the concrete effects of the business war on the results of companies do not yet seem completely at the center of attentions,” insists Thomas GIUDICI, head of the bond management of AURIS GESTION.

The Moody’s rating agency therefore passed its note on the American credit debt of AAA and demoted it to AA1, by adding a stable perspective. It motivates this degradation by the rise in debt of the United States and its cost for the federal budget. She was the last of the three major agencies to make this decision. Fitch had degraded it with a notch, in AA+, in 2023, when S&P was the first rating agency to deprive the United States of its precious triple A in 2011.

“According to the first estimates, which is not final, the United States could see its primary deficit increase up to $ 5.800 billion in the next ten years. This is equivalent to a doubling of the debt growth rate compared to current legislative projections. All other things being equal, the federal debt could reach $ 59,000 billion, or 134% of GDP in 2034 and 211% 2055, against respectively 117% and 156% according to the previous estimates of the Congressional Budget Office “, explains this Monday morning Christopher Dembik, investment strategy advisor at Pictet AM.

Treasuries 10 years old, yields of state bonds due to 10 years, heated slightly to 4.54. The rate at 30 was raised above 5%.

The week that opens will be dense on the statistical front, with the main appointments of the flash data of the PMI barometers for the current month, on both sides of the Atlantic on Thursday. Immediately consumer prices, excluding food, alcohol and tobacco energy, are confirmed up 2.7% in annualized pace for the month of April.

At midday on the foreign exchange market, the euro was treated against $ 1,1270 approximately.

Key graphics elements

The euro / dollar is currently in the phase of an important graphic test: that of the mobile average at 50 days (in orange), the last resumption of support dating from the sweater February 28. A rupture of this trend curve would release additional sales energy. In the immediate future, indecision is noted graphically by a series of stars doji.

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