EUR/USD: customs cleaner and US budgetary law

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The pair of Euro / dollar currencies reflected, although in the background tendency, lost a few pips this Monday, the trades being tense as the deadline of July 9 approaches, to which the White House should announce, except prior agreement, the customs duties it will apply to imports from the members of the European Union.

The American president said that he was going to send a dozen letters to the countries concerned by his customs surcharges which will vary in a range of 10-20% or even will go up to 60-70%. “We have some other negotiations, but you know, I would tend to send a letter to specify the customs duties they will pay,” he also added.

The European Union is also in this phase of negotiations with the American administration, with a view to finding an agreement before the fateful date of July 9. The president of the European Commission, Ursula von der Leyen, said he wanted a “negotiated solution”.

“The United States’s trade policy represents a major challenge and should continue to weigh on activity, in particular by slowing down the investment decisions of companies. Inflation in the euro zone is now well mastered and there is a strong slowdown in wage growth. This environment allows the ECB to soften its monetary policy thus absorbing the slowdown in the activity. that the gradual implementation of investment plans in defense and infrastructure should make it possible to amortize the negative shock linked to customs duties, “comments Nadège Dufossé, Global Head of Asset Allocatio at Candriam.

However, the dollar cannot frankly reverse the trend, especially since the budgetary law XXL, voted by the congress just before the national holiday has no positive effect on the greenback. “This observation challenges, in particular, because it reinforces the idea of ​​disconnecting the course of the greenback with cyclical perspectives, as has been the case since the beginning of April, despite the return of confidence that illustrates the surge of scholarships. Transitional or lasting effect? ​​Beyond short-term upheavals, the answer is undoubtedly for a very large part in the economic consequences of the tax reform, in particular in its ability to restore Structural productivity, only capable of making it possible to absorb the additional budgetary cost.

At midday on the foreign exchange market, the euro was treated against $ 1,1730 approximately.

Key graphics elements

The release of the technical camisole is confirmed, coming to give more meaning to the supporting of the mobile average at 20 days (in dark blue).

The buying position on the spot can be kept as long as the oscillations are built between this trend curve and the high bollingger strips (20; 2.5).

The relative force index (RSI) is in full convergence with the courses.

Medium term

In view of the key graphic factors that we have mentioned, our opinion is positive in the medium term on Euro dollar parity (Eurusd).

Our entry point is 1,1730 USD. The course of course in our Haussier scenario is 1,2464 USD. To preserve the capital committed, we advise you to position a protection stop at 1,1490 USD.

The profitability hope of this Forex strategy is 734 pips and the risk of loss is 240 pips.

Daily data graphics