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The first presidential debate in the United States has destroyed the euro’s rising prospects. The risks of Donald Trump returning to power were higher than the decline of the US economy and France’s exit from the European Union. Let’s discuss this topic and make a trading plan Euro against the US dollar.
USD Weekly Fundamental Forecast
About a week ago, I male The EUR/USD pair was supposed to be stuck between a rock and a hard place. The hammer of French politics was about to smash the euro, while the major currency pair was facing a slowdown in the US economy, which created an obstacle in the pair’s way to fall to its lowest levels. Since then, talks about France’s exit from the European Union have calmed down, and the disappointing statistics coming out of the United States make it possible to say that the euro has finally hit bottom. However, someone knocked from below, and that person was Donald Trump.
The US presidential election is a surreal story. On one side is a criminal, on the other is a man who looks like he’s on steroids. The first debates have shown the advantage of Donald Trump, whose protectionist policies could destroy supply chains and lead to a new spike in inflation. That would force the Fed to keep interest rates at 5.5% and predict a resumption of the monetary tightening cycle. That’s great news for Trump. Euro vs US Dollar Tolerate.
As I noticed yesterday, the presidential debate could overshadow Frexit and US statistics. The fastest decline in US business equipment orders since the beginning of the year and the rise in unemployment claims to their peak since 2021 confirmed the slowdown in the US economy. But Donald Trump outweighed all of these factors.
The political risks of a Republican return to power have overshadowed the complete depletion of Americans’ excess savings, which has left them dependent on wages and heightened the risk of a sharp deterioration in the labor market and dovish rhetoric from Atlanta Fed President Raphael Bostic. The cut in the federal funds rate would be the first in a series of steps by the Fed to ease monetary policy, according to Atlanta Fed President Paul Bostic.
Excess savings of American households
Source: Bloomberg.
The widening spread between French and German bonds fueled the crisis Euro against the US dollar Decline. With the first round of the National Assembly elections approaching, investors are concerned about whether the right will be able to secure an absolute majority. Concerns also increased after Berlin announced that Germany would oppose the European Central Bank’s intervention in the debt market to support French bonds.
The difference in French-German bond yields
Source: Bloomberg.
Political tensions are likely to ease, removing the risk of a Brexit that weighs on the euro. Sooner or later, deteriorating US statistics will force the Fed to consider cutting the federal funds rate. In the face of these factors Euro vs US Dollar It has hit the bottom, and this is a good time to look at long trades. However, one cannot rule out Donald Trump taking office, trade wars, and a possible pullback into clear overbought territory Standard & Poor’s 500 These factors assume that the pair may decline deeper.
EURUSD weekly trading plan
Considering all the above, both long and short trades can be an option. If the pair breaks the support level of 1.0665, short trades can be opened on Euro against the US dollar Pair. At the same time, if the price rises above the resistance level at 1.0725, it is possible to initiate buy trades.
EUR/USD price chart in real time
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