Weakened Europe The information presented in this publication is provided for informational purposes only 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 In the coming months, Europe will be under pressure. Trump will reignite the trade war and, to say the least, the Old Continent is in a very poor position both economically and politically. Could all this lead to a currency war? Faced with Trump, Europe is weakened. It is divided. Unsurprisingly, the first European leaders are rushing to Florida to establish a special relationship with the new American president and thus hope to avoid trade reprisals. Europe is also unable to defend Ukraine. This would require significantly increasing defense spending, around 3% of GDP. The last time such a level was reached in France was at the end of the 1980s...An eternity ago. Finally, Europe is economically weak. Factory closures in France are multiplying. The reasons: energy costs are too high, taxes are increasing, and global demand is declining. What's worse, Germany is on the brink. The country has simply not experienced growth for two years. Its industry, once its flagship, is lagging. Industrial orders are collapsing. In October (latest available figure), 41.5% of German companies reported a lack of orders – a first since the financial crisis of 2009. Notably, the situation is worsening since in last July they were (only) 39.4% expressing such issues. Nearly half of the manufacturing companies are affected, particularly in the mechanical engineering, metallurgy, and chemical industries. The entire German economic model is collapsing. And we can already add the increasing political risk as a problem. Indeed, everything suggests that the ruling coalition, which is now in the minority, will not last until the end of 2025. Conversely, as we have shown in recent weeks in our newsletter, the American economy is in great shape. No one anticipates that Trump's election will drastically change its trajectory. A soft landing remains our central scenario, with growth expected to be close to its potential at 2% next year. Unsurprisingly, the forthcoming trade negotiations between Trump and European leaders, as well as future discussions on NATO, will not be in Europe's favor. In the standoff that will take place, the Old Continent appears in a very poor position. Technical point In the currency market, the beginning of the Trump 2.0 era is synonymous with a strong dollar. The dollar index is at its highest level since mid-April, exceeding the 107 threshold. Several currencies are collapsing, like the Japanese yen which has reached a four-month low against the dollar. The EUR/USD is also in free fall with a weekly loss of 3.8%. For now, the FX evolution reminds us, with a few exceptions, of what happened in 2016 following Trump's first victory. The only notable difference is that the Mexican peso is slightly stronger than it was back then. But that may not last. If the Trump administration implements tariffs, we can expect an even stronger dollar. For the EUR/USD this could mean a return to 1.0350. It should be noted that Deutsche Bank is far more pessimistic than us and has been predicting a return to parity since last week. What is certain is that volatility is here, in proportions we haven't seen since Covid, at least.The supports and resistances displayed below indicate the respective lows and highs within which the prices should evolve during the week.Weekly SupportsWeekly ResistancesS2S1R1R2EUR/USD1.04551.04901.07881.0823EUR/GBP0.82450.82880.84100.8433EUR/CHF0.92450.93000.94120.9502EUR/CAD1.47091.47341.50091.5023EUR/JPY163.35164.00166.11166.44 Announcements to follow It's a new quiet week in terms of statistics that begins. Inflation remains at the center of concerns. In the eurozone, consumer prices should still remain close to the 2% target. This confirms our scenario: the European Central Bank should lower its key rate by 25 basis points during each meeting until mid-2025. On the British side, inflation is even below 2% with a September figure at 1.7% year-on-year. Again, this leaves significant room for the Bank of England to lower the cost of money in the coming months.On the American side, there won't be many statistics. The Philadelphia Fed’s manufacturing index will provide a first glimpse of macroeconomic changes in November. But, let's be objective, the American economy is in great shape. We're talking about American exceptionalism.Below you will find the publications and events that should have a major impact on currency price developments.DayTimeCountryIndicatorWhat to expect?Le 19/11/202411:00EURConsumer Price Index (October)Previous at 2% year-on-year.Le 20/11/202408:00UKConsumer Price Index (October)Previous at 1.7% year-on-year.Le 21/11/202414:30USAPhiladelphia Fed Manufacturing IndexPrevious at 10.3