EUR/USD: American prices for individuals are eagerly awaited

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The foreign exchange market remains suspended from the all-round by the French Prime Minister, François Bayrou, before the deadline of September 08 and a vote of confidence in the Assembly. Going so far as to denounce, in a television interview on TF1, “the comfort of boomers”, the Palois said he was ready to discuss “everything”, except at the bottom of the question, that is to say a budgetary effort of 44 billion euros. Suffice to say that the probabilities of a vote of trust in the majority of deputies are Epsilonesque at this stage.

Among the scenarios that the market envisages, a resignation of the government, followed by an appointment of a new Prime Minister, to the different political color. Unless a new dissolution of the National Assembly rebuts the cards. A scenario whose probability is estimated at 65% by Wilfrid Galand, Director – Strategist at Montpensier Finance.

“Volatility could then be strong, according to the various surveys and up to the elections (which must be held within a minimum of 20 days and 40 days maximum after the dissolution decree. It could affect all the assets of the euro zone including the single currency, with France always on the front line. An output of the yield at 10 years from the OAT to 4% is a risk.”

At a time when we write these lines, French 10 years exceeds 3.50, against 3.43% for its Greek counterpart.

“In this context, the reaction of the ECB would be eagerly awaited,” continues the active management decision maker. “The use of emergency stabilization mechanisms in the euro area remains a possibility that could quickly be on the table of governors in Frankfurt, in close coordination with the authorities of the European Union. For the sake of preserving the integrity of the monetary union, the Frankfurt institution could not remain inactive and the pressure will be important on Christine Lagarde.”

At the macroeconomic agenda this Friday, to follow the PCE prices as a priority (Personal consumption Expenditures), the FED’s favorite inflation gauge. Fed, which is very likely to turn to a decrease of 25 basic points of the dollar rent next month after its monetary policy committee. A FOMC which will be followed all the more than during the Jackson Hole symposium, the boss of the powerful monetary institution paved the way for a little more flexibility. In any case, the Fedwatch tool of the CME Group is 88.2% the probabilities of a 25 -point contraction of the Fed Funds.

Words that “have not changed [les] basic perspectives [de PIMCO]”, which provides” a progressive series of rate drops – probably starting with a decrease of 25 bp in September – to bring the rate of federal funds to a neutral range (3.0 % to 3.5 %), probably before the end of Powell’s mandate to the presidency of the Fed in May 2026. In his speech, Powell quoted the growing risks of lower employment and the transitional nature of the As reasons why the policy “could” require an adjustment – the clearest signal that it could give as to the Fed’s intention to announce a rate drop of 25 bp in September without preliminary commitment. However, he also pointed out that the return to neutrality, at least during the time he has presidency, would probably be progressive and depend on inflationary pressures which would prove to be punctual. “

Economists interviewed by the Wall Street Journal anticipate an increase of 2.9% of the index excluding food and energy.

This morning, the trades learned of inflation and growth figures in France, relatively in line with expectations.

At midday on the foreign exchange market, the euro was treated against $ 1,1680 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 neutral in the medium term on Euro dollar parity (Eurusd).

We will keep this neutral opinion as long as the EURO Dollar parity prices (EURUSD) are positioned between the support at USD 1,1608 and the resistance to 1,1970 USD.

Daily data graphics