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The dollar lost ground against the euro on Friday, after the new “pressure” tariff addressed by Trump to the European Union. The brutal tenant of the White House threatens customs taxes of 50% on June 1, against 10% today. The American president justifies this announcement by the difficulty of commercial negotiations with Europe.
“It is very difficult to deal with the EU, which was created in the first place to take advantage of the United States from a commercial point of view. (…) Our discussions are going nowhere. Under these conditions I recommend that I impose 50% customs duties on the EU, from June 1. There are no customs duties on products manufactured in the United States,” he wrote on his Truth Social platform.
Customs duties applied to European products currently amounted to 12.5% ​​on average, 2.5% corresponding to the level before Donald Trump’s return to the White House, to which have been added 10% since early April and the announcement of his so -called “reciprocal” customs duties. The White House initially planned to tax European products up to 20%, before announcing a 90-day break on customs duties beyond 10%, the time to let the negotiations arrive at their end.
A fact that comes to combine on the exchange market with the American budgetary problem, which will have agitated this week the rooms of the markets. 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 fiscal 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, before this budgetary Mega-Locker was voted in the Chamber of Representatives.
The market was wondering yesterday especially about the scope of this text on the trajectory of the debt of the United States. This project could indeed increase the American public debt, already colossal to nearly $ 37,000 billion, of 3.800 billion over the next decade, according to estimates of the Congressional Budget Office (Congress Budget Budget).
In the statistical chapter, no surprise to report yesterday on weekly registrations for unemployment benefits, in the target at 227,000 new units. Good surprise on the PMI (activity barometers) indicators, in the first estimates for the current month, which have largely exceeded expectations for services and industry, respectively at 52.3 and 52.2.
On the other hand, we note the heavy disappointment on the German component of the PMI German services, in the first estimate for the current month, at 47.2 (2.4 points under the target).
“The economy of the euro zone is struggling to regain a foothold. The composite PMI index, which has only suggested low recovery signs since January, highlights a return of contraction in the region’s private sector in May. However, this drop in activity does not result from American customs duties. The entry into force of these new customs tariffs has rather favored a slight recovery of the recently” Rubia, chief economist in Hamburg Commercial Bank.
“Manufacturing production has indeed increased for a third consecutive month while, for the first time since April 2022, the volume of new orders obtained by the manufacturers has not decreased. On the other hand, in the service sector, however less exposed to changes in American commercial policies than the industrial sector (with the exception of specific activities such as international logistics), activity has become the volume for the first time since November 2024. New affairs from abroad has decreased, it is the weakness of domestic demand which seems mainly weighing on the performance of the sector. “
The IFO of the business climate in the first economy in the euro zone (87.5) remains under pressure but without significantly moving away from consensus.
At midday on the foreign exchange market, the euro was treated against $ 1,1340 approximately.
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. That is to say the formation of several support on this trend curve.
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.
The News Bulletin 247 Council
Daily data graphics
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