EUR/USD: a moment

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The euro / dollar, a tour by retaining a net bias bias on the background, remained subject to a strong nervousness since the announcement by the Prime Minister of the second economic power of the euro zone, of a vote of confidence on September 8, thus opening the way to a risk of censorship. Especially since the national rally, rebellious France, the Socialist Party and the environmentalists have announced that they will not give confidence to the government in the context of this ballot. Between them, the deputies of these different political camps mathematically form a majority, leaving little chance of the maintenance of the current government.

The hypothesis of a new Prime Minister, with necessarily different political balances, becomes the privileged working basis. It is from this uncertainty that the market hates. And the hypothesis of a much less austere than expected budget has mechanical consequences on the rate markets. This announcement has rekindled the spectrum of a political blocking in France, with the risk that measures necessary for the recovery of the trajectory of French public finances are not taken. OAT 10 years heats up above 3.49%, above Greek rates in the same way (3.42%) …

“Political instability, the inability to find a majority to govern and set up a coherent program in the duration will result in markets on the markets. It could be the Liz Truss moment for France, that is to say very high interest rates due to a little reasonable budget program”, analyzes Philippe Waechter is director of Economic Research at Ostrum Asset Management.

Across the Atlantic, operators face an unprecedented problem: the shameless threat, by the White House of fact independence of the Federal Reserve.

During the night of Monday to Tuesday, US President Donald Trump announced the dismissal of the Fed governor, Lisa Cook, who disputes the legality of this decision. This movement once again illustrates the will of the American executive to take control of an institution which needs to be independent to be credible with the markets.

“It is a fatal blow to the independence of the Fed,” said Bloomberg Aaron Klein, principal researcher at the Brookings Institution. “Trump says the Fed will do what he wants, by will or by force,” he added.

Not much to get into the tooth this Wednesday in a macroeconomic chapter. Let us quote the level of crude stocks across the Atlantic at 4.30 p.m. The operators learned yesterday from the consumer confidence index (Conference Board), came beyond expectations at 97.4.

At midday on the foreign exchange market, the euro was treated against $ 1,1590 approximately.

Key graphics elements

The pair of Euro / dollar currencies is in the marked ascending phase, background, above an oblique right that makes sense. We have represented this linear level of graphic support in black. In the immediate future, we will keep an eye attentive to the relative positioning of the mobile averages at 20 (in dark blue) and 50 days (in orange) to optimize the entry points.

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 1,1589 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 1,1409 USD.

The profitability hope of this Forex strategy is 875 pips and the risk of loss is 180 pips.

Daily data graphics