The Return of Trump The information presented in this publication is provided for information purposes only and does not constitute investment advice, an offer to sell, or a solicitation to buy, and should in no way be used as a basis or taken into account as an incentive to engage in any investment. The macro point As is always the case at the beginning of the year, there are more questions than answers. This results in increased volatility across all asset classes. This has been very noticeable in equities in recent sessions and also in currencies, with a significant drop in currencies in Asia and Oceania. Beware! With the return of Trump, geopolitics will once again be in the spotlight. For now, the remarks of the new American president, particularly regarding the Panama Canal and Canada, have been dismissed by many commentators. In reality, it is more subtle. The new American administration aims to create a strategic buffer, notably by ensuring the United States' control over Canada and Greenland. In the case of Greenland, the objective is twofold: to ensure control of the new trade route opening up due to the melting ice, which will significantly reduce maritime freight costs, and to access metals essential for American economic development, particularly uranium, which is abundant in Greenland's subsoil. It would be wrong to think that Trump's remarks do not reflect a geostrategic perception of the world by Washington. Ultimately, the new American president seems to validate the new division of the world that the Russians and Chinese have been promising for about fifteen years: civilization areas each dominated by an imperial state. We are, therefore, at a major geopolitical turning point. From the perspective of the foreign exchange market, this new division of the world, already at work as seen with the conflict in Ukraine, should translate into a significantly strong dollar. Will the Europeans be able to react? One might doubt it. The only glimmer of hope: Denmark, on which Greenland depends, seems to have perfectly understood what Trump was implying by wishing to 'buy' the northern territory. On the foreign exchange market, there is still a bit of a currency war atmosphere, especially in Asia and Oceania. The Indian rupee is hitting a new historical low almost every day against the dollar. For now, the Indian central bank is not intervening in the FX. It's surprising. The Australian dollar also hit a low against the greenback since April 2020 last week. As for the Chinese yuan, the controlled drop continues. The currency is now at its lowest point in fifteen months against the dollar. We are clearly facing a strong dollar. The dollar index is currently overvalued by 9% compared to the basket of major currencies. But this could worsen. The American investment bank Goldman Sachs estimates it could rise by 5% over the year. This does not seem inconsistent to us. On the economic front, the past week has been rather calm. The focus has mainly been on U.S. inflation. There was good and bad. The good news first: producer prices rose only 3.3% year-on-year in December—below expectations (3.5%). The bad news now: airline ticket prices jumped 6.8%, which should increase the core PCE index, closely monitored by the Federal Reserve (Fed), by 0.08 points. This may seem small. In reality, it is likely to reinforce the fears of some investors about the persistence of inflationary pressures across the Atlantic this year. It will certainly be several more weeks or even months before knowing in which direction inflation will really go. Everything will also depend on the economic policy that the Trump administration will follow in terms of trade. As is often the case, at the beginning of the year, there are more questions than answers. Technical point On the currency market, a strong dollar remains the norm, notably against the euro. Technical analysis suggests a drop in the EUR/USD pair to 1.0180, the main support level just before touching parity. It would only take bad news in Europe for this to happen. In just a month, the pair has lost more than 2.1%. That's huge. However, the euro continues to gain ground against the British pound, mainly due to setbacks in the UK bond market. What was completely excluded a few weeks ago is becoming possible. We could have the EUR/GBP pair temporarily reconnect with 0.85. Finally, the euro has lost a lot of ground in recent sessions against the Japanese yen (more than 2% in less than a week) as hedge funds massively buy the yen in anticipation of a rate hike by the Bank of Japan (BoJ). Caution, this is a tactical positioning, meaning that many funds will likely unwind their long positions on the yen if the rate hike occurs. Expect much volatility in the JPY pairs by the end of the month.The supports and resistances displayed below respectively indicate the lows and highs within which the rates should evolve during the week.Weekly SupportsWeekly ResistancesS2S1R1R2EUR/USD1.02031.02241.04011.0411EUR/GBP 0.82660.83020.84900.8502EUR/CHF 0.92590.93220.94110.9458EUR/CAD 1.47221.47991.49111.4934EUR/JPY 157.88158.90162.11163.00 Announcements to follow As was the case last week, macroeconomic news is fairly concentrated. Today's session should be marked by weak trading volumes due to the absence of American operators for a holiday. There will be no major statistics. Weekly jobless claims and existing home sales in the USA typically have very little influence on exchange rate movements.Below are the publications and events that should have a major impact on currency rate development.DayTimeCountryIndicatorWhat to expect?01/23/202514:30USAWeekly Jobless ClaimsMinor statistic with no impact on the financial markets.01/24/202516:00USAExisting Home Sales (December)Previous at 4.15 M.