Strong Dollar The information presented in this publication is purely for informational purposes and does not constitute investment advice, an offer to sell, or a solicitation to buy, and should not be used as a basis or considered as an incentive to engage in any investment. The macro point Politics is always on the minds of traders, especially with the upcoming American election. However, it is more macroeconomics, capital flows, and central banks that will influence exchange rates in the short term. Don't miss this Thursday's meeting: the ECB meeting. Good news, the growth of developed countries is strengthening! Several factors explain this: the end of the manufacturing sector recession, the increase in real wages (taking inflation into account), the end of negative effects related to restrictive monetary policy on credit access, and a timid recovery in some lagging sectors such as real estate, even if this is not the case in all countries. Uncertainty factors obviously remain: compression of company margins if the rise in raw materials continues, labor market development, resurgence of small business bankruptcies (particularly in France), the level of debt in both the public and private sectors that is concerning. However, we are among the optimists. A recession seems to be ruled out. The economic recovery is indeed here. Unsurprisingly, it will be stronger in the United States than in the eurozone. A growth differential of about 1 basis point should persist. This is significant. The U.S. economy continues to be supported by the 2023 fiscal boost stemming from a reduction in levies and also by measures taken under the Trump presidency that are beneficial. The NBER (the American equivalent of INSEE) published a study at the end of June highlighting the very positive effect on investment spending of the reduction in taxation on American businesses decided under the 'Tax Cuts and Jobs Act' of 2017 - an example to follow in France? After the elections in France and the United Kingdom, it's the United States' turn. Nate Silver, who is considered the best forecaster for the American election, estimates that in a duel between Trump and Biden, the Republican candidate has a 66% chance of winning. Obviously, many things can happen before November 5th. Rumors regarding Biden's replacement are intensifying, for example. Silver predicts that if Biden loses in Georgia, Arizona, and Nevada - which is likely - he will absolutely need to win the states of Michigan, Wisconsin, and Pennsylvania to have a chance of being re-elected to the White House. Problem: all these states are very different from each other and do not have the same electorate at all. Wisconsin is very rural, while Michigan has the largest Arab, Muslim, and Palestinian population in the United States (with the problems known due to the Biden administration's stance on the Middle East situation). If you are interested in the American election, which will in any case have an effect on the dollar, don't miss Silver's upcoming updates. No matter who wins the American presidency, we still project that the dollar will remain strong in the medium term under the effect of two main factors: an economy that outperforms the rest of the world thanks to a well-allocated budget deficit and a cost of money that offers a higher and more secure yield than most other currencies. Technical point In the foreign exchange market, major trends remain unchanged: the yen is collapsing, the euro holds (for how long?), the US dollar is strong, and the Canadian dollar stumbles despite a nearly 10% rise in oil prices over a month. Among emerging European currencies, the Polish złoty shows an impressive performance. The currency has been in a strongly upward trend since late 2022. Over one year, growth is at 3.44%. Impressive. This is explained by the Polish central bank’s control over inflation recovery and especially by Poland's good economic momentum (it is an essential hub in Central and Eastern Europe for foreign investors). The support and resistance levels displayed below indicate the low and high points within which exchange rates are expected to evolve during the week.Weekly SupportsWeekly ResistancesS2S1R1R2EUR/USD1.0591.06551.09131.1000EUR/GBP0.83100.83880.85900.8612EUR/CHF0.95830.96090.97880.9899EUR/CAD1.44901.45901.47901.4888EUR/JPY170.88172.11174.99175.56 Announcements to follow This week, the European Central Bank (ECB) will be at the center of attention. It should be an opportunity to confirm the prospect of a further 25 basis point rate cut in September – which has already been hinted at by Christine Lagarde. Thus, there is little uncertainty about the short-term evolution of monetary policy in the eurozone. This is good news. Moreover, the interbank market has already partly reflected this upcoming cut. No major statistics from the US side. Two other central bank meetings are still in sight at the end of the month, those of the Bank of Japan (BoJ) and the US Federal Reserve (Fed). In both cases, we expect a status quo on monetary policy. It is not even certain that the Fed will give specific indications on the next steps – some analysts predict the start of the monetary easing cycle in September, but it is not certain. Finally, always pay attention to summer risks: devaluation of the Chinese yuan, BoJ intervention to rescue the yen, etc. For now, there is no reason to panic. Below you will find the publications and events that should have a significant impact on exchange rate developments.DayTimeCountryIndicatorWhat to expect?11/07/202408:00UKMonthly GDP (May)11/07/202414:30USAConsumer Prices (June)Previous at 3.3% year-on-year.12/07/202414:30USAProducer Prices (June)Previous at -0.2% month-on-month.