The balance of power established by the US president has enabled the United States to renegotiate customs duties with its main trading partners, with the notable exception of its Chinese competitor. It must be said that the US position, so dominant at the end of World War II, has gradually lost momentum. The map below illustrates this perfectly. While in the early 2000s, the US and Europe largely dominated world trade, the situation in 2024 paints a very different picture. The US stronghold in Latin America has eroded in favor of China, as has European dominance in Africa, the Middle East, and Asia. On a global scale, one could almost say that trade is local (everything is relative, of course). What is particularly striking is the predominance of the Middle Kingdom in global trade.
Worse still, while Chinese exports have reached a new all-time high, sales to the US are at the same level as in 2018. This decoupling between the two world super-powers is obviously not in the interests of the Americans, who have less leverage over their Asian competitor, even though the latter has a stranglehold on almost all of the production of rare earths, which are so important to all our industries. I invite you to read Laurent Pignot's excellent article on this subject.
What does this have to do with currencies, you may ask?
Paradoxically, the weakness of the US dollar has benefited the yuan, whose performance remains closely linked to the greenback.
Thus, even in the event of tough negotiations, the Chinese now seem better equipped to absorb the shock, which certainly explains their reluctance to make any changes.
Technically, the EUR/USD is still trading above its key support level of 1.1500, which only a break below would truly validate the medium-term consolidation scenario. It should be noted that, at the same time, the dollar index (DXY) has not yet managed to break above 99.50.
The USD/JPY has performed well on its support at 149.90 and is retesting previous highs at 153.27 before ideally continuing its rise to 154.15/50. The Aussie and Kiwi have so far held their targets at 0.6445/00 and 0.5690. The former is currently testing initial resistance at 0.6545, which it will need to hold at the close to keep the consolidation structure that has been in place since mid-September intact.
