EUR/USD: blocking of the Ormuz Strait, a credible scenario?

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While the barrel of goal approaches $ 75 for WTI, due to the war between Israel and Iran, the single currency, as a barometer of appetite for the risk on the financial markets, continued its consolidation movement in the immediate vicinity of an important technical zone: the $ 1,1460.

Donald Trump, through the White House spokesperson, gives himself two weeks during which the possibility of direct American military intervention in Iran could if necessary materialize.

“For the markets, the question is what magnitude will be the American commitment in the conflict between Israel and Iran. Hence the feverishness observed [mercredi]. For the moment, this is limited to the provision of strategic information to the Israeli government and the transfer of military aircraft, including bombers, in the Basic of the Gulf and especially in Diego Garcia. There is more fear than harm, so far. Many investors fear the blocking of the Strait of Ormuz. It doesn’t seem credible. Revolutionary guards have apparently tried to blur the GPS and GNSS signals (satellite navigation) in the area, with a very mixed success. Only two merchant ships have encountered difficulties. The circulation is fluid and normal, as satellite images prove.

This “delay” of Trump who wants to leave a possibility of negotiation, associated with this fluidity of traffic in the Strait of Ormuz, prevents for the moment all flambé of crude, which remains firm but without excitement of the buyer camp. The euro therefore holds its positions in relation to the greenback.

The strategy counselor even goes so far as to push the reasoning to an end, namely in the event that Tehran performs his threat of blocking the Strait of Ormuz.

“Alternatives exist to transport oil, in particular the east-west oil pipeline of Saudi Arabia, 1,200 km long, which links the oil fields of the eastern province to the port of Yanbu on the Red Sea. About 500,000 barrels per day currently pass there-ten times less than its total capacity. Consequently, no need to go through the Strait in the event of blocking”.

At the macroeconomic agenda this Friday, to follow in priority the manufacturing index of the Fed of Philadelphia (Philly Fed) at 2:30 p.m. Enough to resume the temperature on the American side after the closure of Wall Street yesterday. Let us recall the main statistical of the week, published Tuesday with monthly retail sales. Over a month, these retail sales, it could not be more direct of the appetite of the American consumer, bent 0.9%, against -0.1% the previous month and -0.5% of consensus.

The retail sales report of May confirms that the gloom is installed among consumers. Beyond the strong variations of the last months, which are explained themselves by the volatility of car sales caused by pricing announcements, household consumption is without real trend. As with the labor market, developments are not negative enough to move the Fed but they are enough for it to remain alert, “comments Bastien Drut, responsible for strategy and economic studies.

At midday on the foreign exchange market, the euro was treated against $ 1,1530 approximately.

Key graphics elements

Thursday, June 12, the spot freed from the grip of a resistance zone at $ 1,1460, a zone which is already early tested, in the form of a sweater This Friday. The absence of upward expansion after the crossing of the $ 1,1460 is doubted about the capacity of the spot to continue in the coming weeks its substantive ascending movement. The test of the mobile average at 50 days (in orange) will therefore be essential. In the immediate future, a continuation of the oscillations without amplitude, in lateral technical camisole, is envisaged.

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 courses of Euro Dollar parity (EURUSD) are positioned between the support at 1,1460 USD and the resistance to 1,1674 USD.

Daily data graphics