EUR/USD: Sino-American trade tensions

(BFM Stock Exchange) – This article, with free access, is produced by the research team in BFM Stock Exchange analysis and market strategy. To not miss any opportunity, consult all of the analyzes and discover our portfolios by accessing our privilege space.

The dollar lost a few pips in front of the dollar in a context of renewed tension on Sino-American trade relations, the euro for its part taking advantage of a boost of another barometer of appetite for the risk, the barrel of crude.

Friday, Donald Trump accused his commercial “partner” [la Chine] not to respect “his agreement”. The Washington Brussels front is also monitored like milk on fire. “It is likely that Europe is again the target of the White House in the coming days. This is likely to stir up volatility on the stock market and to encourage institutionalists to alleviate their positions on actions – a phenomenon which is usual before summer but which could be exacerbated this year because of protectionism,” said Christopher Dembik, of Pictet AM.

On the oil side, the August contract on the Brent de Mer du Nord advances 3.8% to 65.18 dollars per barrel while that of July on the WTI listed in New York gained 4.21% at 63.35 Dollars per barrel. Black gold courses climb that the organization of oil exporters (OPEC) and its allies announced a new increase in its production of 470,000 barrels per day in July, the same figure as in May and June.

But “the market feared, last week, a process of suppressions (production reductions spent in recent years, editor’s note) faster at the meeting of (this Saturday), so that oil prices could react positively to this news,” UBS wrote in a note published this weekend.

In the statistical chapter Friday, the PCE index, a preferred gauge of the American Federal Reserve (Fed) to measure inflation, came slightly lower than expectations in April, at 2.1%, against 2.2% expected. “PCE inflation has returned to its lowest level for four years and has not currently showed a significant impact of customs duties implemented in recent months,” observes Bastien Drut, head of CPR AM strategy and economic studies. The economist evokes a “very reassuring” publication for the Fed. Also note the good surprise of the consumer confidence U-Mich index, which stands out in revised monthly data almost 1.5 points above the first estimates.

To follow at 4:00 p.m. the PMI ISM manufacturing. This morning was published the final data of PMI activity barometers in industry in the euro zone for the month of May. At 49.4 in final data, the score for the entire monetary union of varies no iota compared to the first estimates. Recall that a score lower than the 50 mark means a contraction of the sector considered.

At midday on the foreign exchange market, the euro was treated against $ 1,1420 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. We have two of us.

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