EUR/USD: TOO BIG TO FAIL?

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The dollar lost a few pips Faced with the euro on a background of bond relaxation, to put on the account of the perspective of a relaxation of the American monetary policy. Deposit that the market, as a whole, envisages more supported than expected after the publication of the last health bulletin of private, the famous NFP (for non -Farm Payrolls).

“The American labor market remains paralyzed by the economic uncertainty induced by the economic policy of the Trump administration. Employment at the end and pressures on the members of the FOMC leave little doubts on a next decrease of 25 bp of the Fed Funds”, Act Axel Botte of Ostrum Am. The prospect of a larger drop, of 50 base points at once, is even to be taken into consideration. The CME Group’s Fedwatch tool is 8% this weak, but now significant, probability. As a reminder, the tool makes it possible to assess in real time the probabilities of evolution of federal rates and the American monetary policy according to the price of term contracts on federal funds at 30 days.

Basically, the content of this August NFP only confirms the (very) slight deterioration of private employment health across the Atlantic. In detail, this federal report for the whole month of August highlights a slight increase in the unemployment rate, to 4.3% of the active population, in the target defined by consensus. Target also reached for the average increase in hourly wages (+0.3%). On the other hand – and it is there that the rub -, the creations of posts in the private sector excluding agriculture, expected to decrease at 75,000, in fact point to 22,000.

Treasuries 10 years old, yields of the federal sovereign obligation due to 10 years, continued its decline at 4.07%. As a reminder, this essential marker for the robberies exceeded 4.59* on May 21.

“If this monetary relaxation is apparently good news for the financial markets, it also reflects the fear of rapid shortness of breath. Some analysts again evoke the spectrum of a recession across the Atlantic. The slowdown is partly attributed to the commercial uncertainties linked to the policy of Donald Trump and to the weakening of the interior demand. In the second quarter, the growth of the American GDP Rental at 1.6 % in annualized pace, compared to 2.4 % in the first “, for Philippe Crevel of the circle of savings.

For its part, the euro resisted very well in the face of the French political situation, the day after a vote of trust in the National Assembly, precipitating without any surprise the fall of the Bayrou government.

“Rightly or wrongly, investors consider that France is” Too Big to Fail “, analyzes Christopher Dembik, investment strategy advisor at Pictet AM, not forgetting that it is worth” it is better to be wrong with the market than reason alone “, according to the precious stock market adage.

“In the worst case, they believe that the ECB will intervene by buying temporarily and on the sly of our debt – as it did in December 2024 after the Barnier government fell. In the short term, the problem is essentially economical. The government matches growth of +0.7% in 2025, after +1.1% in 2024. It was not realistic before the announcement of the vote. The best of cases, it should reach +0.5%. all the engines of growth are broken down: the domestic demand is almost zero, the prospects for hiring and investment are at half mast, the low wages and the foreign trade – even if it has never been our strong – is in free fall because of the renewed protectionism.

In the immediate future, more than the name of the next tenant of the Matignon hotel, the operators on currencies will be attentive to the updating, by the Fitch agency, of the French sovereign notation. Recall that on March 14, the famous and influential rating agency gave an “AA-” with a negative perspective to our country.

Andrea Tueni, responsible for market activities at Saxo Banque, warns: “The next few months are of major importance, with expected revisions of rating agencies: the fitch verdict is expected this Friday, followed by those of Moody’s next month and S&P in November. The rates of French bonds (OAT at 10 years) are under pressure, treated at levels similar to those of Greece and Italy, around 3.50 %.

Yesterday on the Statistical Front, the operators learned of the index feelix of investors in the euro zone, falling at -9.2 points. “A bitter disappointment for optimists”, can be read in the press release accompanying the raw data. “”

The “current” confidence component has reached its lowest level since March 2025 and economic concerns are coming back in force. We can no longer speak of a reversal of trend concerning the German economy, since the German economic index drops from 9.4 points to -22.1 points. The American economy also shows lighter signs of slowdown. Expectations fall to -10.8 points and the current situation is also deteriorating at -0.3 points. A glow of hope, however: Asia, including Japan, is a stabilizing factor in the global trend. This means that the global economy is (still) currently able to maintain its growth rate. “

To follow the producer prices and consumer prices in the United States tomorrow. Two major meetings for the Fed and the Cover community.

At midday on the foreign exchange market, the euro was treated against $ 1,1760 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 (EURUSD) prices are positioned between the USD 1,1608 support and the resistance to 1,1835 USD.

Daily data graphics