EUR/USD: geopolitical uncertainty

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The euro remains firm against the dollar at the start of the week, carried by a macroeconomic environment favorable to the single currency. The exchange markets now incorporate a high probability of seeing the American federal reserve lowering its guiding rates from its meeting on September 16 and 17, after a series of indicators revealing a slowdown in growth and a weakening of the labor market. The recent remarks of Michelle Bowman and Christopher Waller, two members of the Council of Governors, reinforce the idea of three drops by the end of the year. Their argument is based on the need to adapt the monetary policy to a loss of speed, believing that the risk of higher inflation is now secondary in the face of the risk of economic contraction.

This accommodating perception is reinforced by the stability of guiding rates since December (4.25 %-4.50 %) and by the expected publication this week of several key indicators in the United States: the Consumer Price (ICC), the Production Price (PPI), retail and industrial production. A CPI which would approach 3 % would nevertheless complicate the task of the Fed, the official objective of which remains to bring inflation to 2 %.

On the geopolitical and commercial level, operators monitor several fronts likely to cause sudden movements on the currency market. The pricing truce between the United States and China, concluded last month, expires on Tuesday. It had temporarily frozen additional American customs duties on Chinese products at 30 %, and maintained Chinese taxes on American imports at 10 %. The latest declarations by the Secretary of Commerce Howard Lutnick suggest an extension of 90 days, which would reduce the immediate risk of climbing, but would not solve the structural tensions between the first two world economies.

The second home of tensions remains the war in Ukraine, with a summit scheduled for Friday between Donald Trump and Vladimir Putin in Alaska. The hypothesis of a partial reduction in economic sanctions against Moscow, in exchange for territorial concessions, feeds speculations. If such a scenario was born, it could change the investment flows to European assets and indirectly influence the euro. kyiv, who rejects any compromise, called on his European allies to adopt a common position in the face of possible American-Russian bilateral negotiations.

In the medium term, the dynamics of the euro remains upward, despite a short -term consolidation. The accelerations observed on high points indicate a persistent buying pressure. As long as the major support located at 1.14 is defended, the technical bias remains positive on the EUR/USD pair, with a recovery potential to recent summits.

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 1,1658 USD. The course of course in our Haussier scenario is at 1.2000 USD. To preserve the committed capital, we advise you to position a protection stop at 1,1380 USD.

The profitability hope of this Forex strategy is 342 pips and the risk of loss is 278 pips.

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