EURUSD violates key trendline on fading trade tensions and Brexit optimism

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mlawson71 wrote: Thu Dec 12, 2019 10:00 pm It's consolidating around 1.1130, I think we may see it reach 1.1150 and above by the end of the week.
Agreed!

EUR/USD violates key trendline on fading trade tensions and Brexit optimism


  • President Trump may announce a Sino-US trade deal on Friday, according to Bloomberg.
  • UK's PM Johnson is heading for a big win in elections.
  • Brexit optimism and fading trade tensions could keep EUR and GBP better in Europe.

EUR/USD is better bid on reports stating the US could announce China trade deal on Friday and due to Brexit optimism.

The currency pair is currently trading at 1.1178, representing a 0.45% gain on the day, having hit a high of 1.12 in the Asian session. That level was last seen on Aug. 13.

The daily chart shows the trendline connecting September 2018 and June 2019 highs has been convincingly breached.

Tracking GBP higher

The Euro picked up a strong bid in Asia with Pound jumping to a 19-month high of 1.3515 on exit polls forecasting a landslide victory for Prime Minister Boris Johnson's Conservatives.

A decisive victory for Johnson is seen paving the way for Johnson to take Britain out of the European Union (EU) on Jan. 31. The resulting drop in the uncertainty could bode well for the UK economy.

As per the latest reports, the Conservatives have won 191 seats of 365 seats declared, while the Labour party has won just 131 seats.

With Johnson in lead, both Pound and Euro may remain better bid in Europe. The Prime Minister needs to win at least 326 seats out 650 to win a majority.

US to announce the trade deal

President Trump may announce the US-China trade deal in Washington on Friday, sources told Bloomberg.

The fading trade tensions is good news for the EUR. After all, the 18-month trade war between the world's two biggest economies has pushed Germany, the Eurozone's largest economy, on the brink of recession.

The trade deal may also ease pressure on the European Central Bank to do more. The central bank kept rates unchanged on Thursday, having delivered a 10 basis point rate cut in September. The rates currently stand at -0.50%.

All in all, the path of least resistance for the EUR looks to be on the higher side. Even so, a minor pullback could be seen if the GBP sees a "sell the fact" pull back on official confirmation of Johnson's victory.

Technical levels


Sources: https://forex-station.com (Chart) & https://www.fxstreet.com/news/eur-usd-v ... 1912130413 (Article)
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Re: EUR/USD

753
EUR/USD did decide to rally above the consolidation before the end of the holidays after all, the pair rallied to 1.1200 today and remains quite bullish. Let's see whether it will break out above 1.1200 before the market closes today.

Chart: EURUSD surrenders a major part of early modest gains to 200-DMA

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EUR/USD surrenders a major part of early modest gains to 200-DMA


  • EUR/USD retreats from 200-DMA on softer French/German Manufacturing PMIs.
  • Slightly better Services PMI and persistent USD selling helped limit the downside.

The shared currency lost some ground during the early European session on Monday and dragged the EUR/USD pair to the lower end of its daily trading range, around the 1.1130 region.

The pair failed to capitalize on its early uptick and started retreating from the very important 200-day SMA following the disappointing releases of manufacturing PMI prints from the Euro-zone's two largest economies – France and Germany.

Mixed Euro-zone PMI prints failed to impress bulls

In fact, the French Manufacturing PMI barely managed to hold in the expansion territory and came in at 50.3 for December, down from the previous month's final print of 51.7 and consensus estimates pointing to a reading of 51.5.

Adding to this, the German Manufacturing PMI unexpectedly fell to 43.4 during the reported month as compared 44.5 expected and 44.1 previous, hitting two-month lows and contracting for the 12th consecutive month in December.

Meanwhile, the broader Euro-zone Manufacturing PMI also missed market expectations, though the negative readings, to some extent, were offset by slightly better-than-expected Services PMI prints and extended some support.

This coupled with the prevalent US dollar selling bias, despite a modest intraday pickup in the US Treasury bond yields amid the latest optimism over the US-China trade deal, further collaborated towards limiting the downside.

Moving ahead, the flash version of the US Manufacturing PMI, a key highlight from Monday's relatively thin US economic docket, will now be looked upon for some impetus later during the early North-American session.

Technical levels to watch


Source: https://forex-station.com (Chart) & https://www.fxstreet.com/news/eur-usd-s ... 1912160922 (Article)
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Chart: EURUSD off lows, still below 1.1150 amid USD comeback

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EUR/USD off lows, still below 1.1150 amid USD comeback


  • 200-DMA remains a tough nut to crack for the EUR bulls.
  • Trade deal doubts offer support to the USD recovery.
  • Markets await US Industrial Output and trade updates for fresh impulse.

EUR/USD came under fresh selling pressure over the last hour and eased nearly 10 pips from the Asian range trade seen between 1.1140-1.1150 levels, mainly driven by solid rebound staged by the US dollar vs. its main competitors.

At the press time, the pair has managed to jump off 1.1129 lows, as it looks to re-attempt the 200-DMA barrier, now placed at 1.1153.

EUR/USD weighed down by trade uncertainty?

The US dollar picked up the recovery momentum across the board, courtesy a fresh selling wave caught by the GBP/USD amid resurfacing no-deal Brexit fears, as the UK PM Johnson is likely to set a new deadline to prevent any extension of the Brexit transition period beyond 2020.

Additional strength in the US currency can be attributed to the doubts over the details of the US-China Phase One trade deal, with the Chinese officials not very welcoming about the specifics despite several assurances from the White House. In times of market uncertainty, investors tend to seek safety in the world’s reserve currency, the US dollar.

Meanwhile, in absence of any significant macro news from the Eurozone docket, markets look forward to the US Industrial Production and JOLTS job openings data due later in the NA session. In the meantime, the spot will continue to remain at the mercy of the USD dynamics, as the shared currency shrugs off the recent comments on the EU-US tariffs. However, the ECB policymaker Rehn's dovish comments seem to have collaborated with EUR/USD's latest downtick to daily lows.

EUR/USD Technical levels to watch


Sources: https://forex-station.com (Chart) & https://www.fxstreet.com/news/eur-usd-o ... 1912170945 (Article)
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Chart: EURUSD keeps lows despite upbeat German IFO Business Climate Index

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EUR/USD keeps lows despite upbeat German IFO Business Climate Index


  • German IFO Business Climate Index came in at 96.3 in December.
  • German IFO Current Economic Assessment stood at 98.8 in December.
  • German IFO Expectations Index arrived at 93.8 in December.

The headline German IFO Business Climate Index came in at 96.3 in December, firmer than last month's 95.0 and bettering the consensus estimates pointing to a reading of 95.5.

Meanwhile, the Current Economic Assessment arrived at 98.8 points in the reported month as compared to last month's 97.9 and 98.1 anticipated.

On the other hand, the IFO Expectations Index – indicating firms’ projections for the next six months, came in at 93.8 for Dec, up from previous month’s 92.1 reading and beat market expectations of 93.0

The headline IFO business climate index was rebased and recalibrated in April after the IFO research Institute changed series from the base year of 2000 to the base year of 2005 as of May 2011 and then changed series to include services as of April 2018. The survey now includes 9,000 monthly survey responses from firms in the manufacturing, service sector, trade and construction.

The upbeat German IFO numbers served had virtually no impact on the Euro, leaving EUR/USD in the familiar range between 1.1125-1.1150 levels. The spot hit fresh session lows of 1.1127 a few minutes pre-data release and now trades at 1.1135, down -0.13% on the day.

Sources: https://forex-station.com (Chart) & https://www.fxstreet.com/news/eur-usd-k ... 1912180902 (Article)
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