EUR/USD: Iron health of the American consumer

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The Euro Dollar stabilized occasionally in the immediate vicinity of its mobile average at 20 days (in dark blue) in the aftermath of a publication showing the health of the American consumer. Health which could be confirmed at 4:00 pm by the “U-Mich” index.

Published yesterday, retail sales jumped 0.6% (0.5% excluding cars), against an expected quasi-stagnation. What to support more the probabilities of a status quo Monetary at the end of the month, to the chagrin of Donald Trump, who continues to exert indecent pressure on the boss of the Fed, J Powell, so that he softens his monetary policy.

Several sources reported on Wednesday July 16 that the American president was preparing to dismiss the president of the Fed. But the president denied the information, believing that the dismissal of Jerome Powell was “highly improbable”.

Trump believes that Powell “does bad job” but he is “not talking about” to dismiss him, he assured. “We are not planning to do anything,” he added.

“Beyond the interest rates, Trump has pointed out the renovation expenses of the Fed headquarters, described as” ridiculous extension to $ 2.5 billion “.” Is this a reason to justify a dismissal? I think it can be, “he launched, in reference to an envelope validated by the Management and Budget Office (OMB)”, explain the specialists.

Trump keeps calling Jerome “Too Late” Powell to lower the dollar rent. However, the latter justifies its cautious attitude by the inflationary effects still difficult to quantify extreme budgetary and commercial policies of the White House.

“Given the economic slowdown, we plan a reduction in the Fed guiding rates of 75 base points by the end of the year, and a cumulative monetary relaxation of 100 basic points over the next twelve months, in accordance with market expectations. This point is decisive for the exchange market: for a new significant depreciation of the dollar to materialize, it would probably be necessary to adjust Fed monetary policy anticipations “, anticipates Claudia Panseri, Chief Investment Officer, UBS WM France, which brings the following understanding keys:

“Several other elements continue to exert down pressure on the dollar. Trump policies – including the possible appointment of a new president of the Fed, the dynamics of customs duties and the American budget plan – will also play a decisive role in the evolution of the American currency.”

At the macroeconomic agenda this Friday, to follow in priority the preliminary data of the consumer confidence index (U-Mich) at 4:00 p.m.

At midday on the foreign exchange market, the euro was treated against $ 1,1645 approximately.

Key graphics elements

While the 1,1674 were broken in a certain volatility, we are waiting to gauge the quality of the spot reaction in contact with the mobile average at 50 days (in orange). So far, this background trend curve has a significant support role.

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 1,1970 USD.

Daily data graphics