EUR/USD: neutral before American inflation

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The Euro-Dollar evolves in a context dominated by commercial geopolitics and expectations vis-à-vis the federal reserve. Donald Trump announced an extension of 90 days of the suspension of the increase in customs duties on Chinese imports, a measure largely anticipated but which maintains the tariff question at the center of the debates. Investors feared that a increase in prices linked to these commercial barriers will nourish American inflation, thus complicating the task of a Fed already under high political pressure to reduce its rates in September. Currently, the markets estimate at almost 89 % the probability of a drop of 25 basic points at the next meeting, but this conviction will largely depend on the inflation figures published today at 2:30 p.m. French time. Consensus tables on a 0.3 % increase in the consumer price index excluding food and energy in July. A moderate figure would strengthen the anticipations of a monetary easing, while a bullish surprise could repel the deadline, at the risk of accentuating tensions with the White House. On the technical level, the euro retains an upward trend in the medium term but is locked up in a consolidation phase. The $ 1.14 zone constitutes a strategic pivot: its breakdown would reverse the dynamics in favor of the greenback, while a favorable fundamental signal – for example a figure in American inflation lower than expectations – would offer the single currency the necessary momentum to resume its progression to the $ 1.20 zone, a key objective observed by many operators.

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.

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