EUR/USD: concerns about Uncle Sam’s debt

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The intense questions on the US budgetary file weigh on the dollar.

So certainly the markets of the markets did not await the decision of the Moody’s agency to degrade the sovereign American note to have a critical look at the public finances of the first economy of the world. And they are even used to putting this type of decision into perspective on the part of a rating agency. Nevertheless, market psychology on the greenback is scorned.

On Tuesday, Donald Trump went to the congress, urging Republican elected officials to support his “big and beautiful law”, while important dissensions within the presidential party slow down the examination of this tax project.

However, this vast tax reform could lead to an increase in American debt, which is already unbearable of $ 37,000 billion. “President Trump’s tax bill has intensified concerns about long-term budgetary viability, in particular after Moody’s’s decision to lower the sovereign credit note on the United States on Friday,” said Konstantinos Chrysikos at Kudotrade.

This is likely to worry investors, and these fears have repercussions on the bond market. The yield of the US Treasury voucher at 10 years is 4.53% and that of the deadline at 30 years changes above the symbolic threshold of 5%.

The maximum note, “Standard & Poor’s had withdrawn it in 2011,” followed “by Fitch in 2023. In addition, the arguments put forward by Moody’s to justify this degradation are already relatively well anchored in the heads of investors: flight of debt, digging budget deficits and weighing down the cost of debt”, for Thomas GIUDICI d’Auris Gestion.

The rating agency has deprived the American debt of its precious note AAA to demo it to AA1 with a stable perspective.

“Above all, American credit indicators are now significantly deviating from those of the countries still rated AAA by the agency. As an example, the load of interest – including federal debt, that of states and local authorities – represented 12 % of American public revenues in 2024, against only 1.6 % for the average of other countries benefiting from the supreme note”.

At midday on the foreign exchange market, the euro was treated against $ 1,1350.

Key graphics elements

The pair of currencies currently succeeds in the highly important graphic test of the mobile average at 50 days (in orange). A breath of breath is necessary before the conquest of new highests.

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