New Resident at 1600 Pennsylvania Avenue The information presented in this publication is communicated to you for informational purposes only and does not constitute investment advice, an offer to sell, or a solicitation to buy, and should not be used or taken as a basis for any investment engagement. The macro point Trump's victory means a strong dollar (bad news for the euro) and a lasting return to volatility in financial markets, particularly Forex. According to us, the political transition period opening in the United States is conducive to a resurgence of geopolitical tensions in Eastern Europe and the Middle East. It's a good time to be interested in safe havens! It's done. Trump won, to everyone's surprise. Trump trades were in full swing last week: on November 6th, the dollar index recorded its largest increase since 2020, the euro collapsed, bank stocks and Tesla shares soared (Elon Musk is likely to be part of the next American administration) while Bitcoin reached new records. Rumors are also swirling in trading rooms: many traders fear a massive devaluation of the Chinese yuan in reaction to the imposition of new American tariffs (60% increase in taxes on Chinese imports), U.S. bond yields will explode due to the deficit increase, etc. In reality, the dollar will remain strong because the American economy and its stock market outperform the rest of the world. Bond yields are expected to stabilize, probably around 4% on benchmark 10-year bonds – which remains sustainable. Furthermore, we doubt that the Chinese yuan will collapse. For now, it is rather stable (partly because it is administered by the Chinese central bank). Moreover, it would be a risky choice for Beijing to operate a devaluation as it would cause massive capital outflows from China, which will be difficult to stem later. We don't see the Chinese authorities repeating the same mistakes as in 2015, especially in a context of sluggish economic recovery. However, the coming months are likely to be turbulent in financial markets, particularly in the currency market. The political transition period starting across the Atlantic between the two administrations is especially conducive to an increase in geopolitical risk. All experts expect the direct armed conflict between Iran and Israel to continue and for new strikes to occur by the end of the year. The most delicate hotspot is probably in Eastern Europe. The situation in Ukraine remains confused. Russia, which holds military power, could decide to open a new front to discredit NATO. Where? At the Suwalki corridor. It's a small strip of land 65 km long between Lithuania and Poland that connects Belarus to the Kaliningrad Oblast (Russia). It's an area with almost no strategic use. Russian goods do not pass through it due to the lack of worthy road infrastructure (even though it's a faster route than going through Lithuania or by sea). Moscow could take advantage of President Biden being a lame duck to provoke NATO by invading the corridor. In theory, this should trigger a military response from NATO. But who would fight for an almost uninhabited corridor? No one... However, NATO's deterrence capacity would take a hit. Let's keep in mind what the Russian ambassador to London, Alexander Yakovenko, stated in 2015. The objective of the Russian strategy is to dismantle NATO. There is certainly an opportunity window opening to try to do so. In the foreign exchange market, this could translate into higher volatility in the weeks and months ahead. It will therefore be important to consider short-term exposure to safe havens (dollar, yen, and Swiss franc) to cushion a potential geopolitical shock. Just in case... Technical point Unsurprisingly, the dollar posted a strong performance last week, particularly against emerging currencies. Excluding the partially managed Russian ruble and Chinese yuan, the dollar index is now at its highest historical level against emerging currencies. Even during the U.S. rate hike phase in 2022, the greenback was not as strong. As we have repeated for months, we are convinced that the dollar's exchange rate will remain at high levels in the coming months or even years. Remember that the USD is THE international reserve currency, which structurally leads to strong demand for the currency and pushes it higher. In terms of EUR/USD, we believe the outcome is set and a decline towards 1.05 is inevitable.The supports and resistances shown below indicate the respective lows and highs within which the rates should evolve during the week.Weekly SupportsWeekly ResistancesS2S1R1R2EUR/USD1.07221.07491.09011.0922EUR/GBP0.82790.82990.84010.8421EUR/CHF0.93090.93220.94990.9520EUR/CAD1.47981.48431.50441.5100EUR/JPY163.14164.09165.99166.45 Announcements to follow This week is set to be calm in terms of statistics. Inflation figures across the Atlantic (consumer prices and producer prices) should not in any way change the Fed's roadmap, which should continue with a 25-basis point rate cut pace in the coming months. We also doubt that the Fed will be significantly influenced by Trump's victory. The neutral rate, around 2%, should still be reached by mid-2025 across the Atlantic.Below you will find the publications and events expected to have a major impact on currency rate developments.DayTimeCountryIndicatorWhat to Expect?11/13/202414:30USAConsumer Prices (October)Previous at 2.4% over one year.11/14/202414:30USAProducer Prices (October)Previous at 0% over one month.11/15/202408:00UKQ3 GDP (first estimate)Previous at 0.7% over one year.