Trump Instills Hope of a Trade War Resolution
Risk assets jumped higher in US trading yesterday after an announcement that Trump will be delaying the September 1 deadline for imposing a 10% tariff on remaining Chinese goods.
The announcement triggered volatility in the markets, with equities rallying while treasuries and gold declined. In the currency markets, high yielding currencies such as the New Zealand and Australian dollars gained while funding currencies like the Euro were under pressure. Safe haven currencies reversed back some of their earlier gains on the renewed risk appetite.
The decline in the single currency was minor compared to the volatility seen across the markets and EUR/USD held within a range that has been playing out for over a week now.
Euro Data Mostly Softer Than Expected
GDP growth in Germany declined by 0.1% in the second quarter. This was in line with analyst forecast and did not have much of an impact on the exchange rate.
Data out of Europe was softer than expected and EUR/USD was last seen easing lower as a result of it. Employment change was reported at 0.2% for the quarter and 1.1% on an annual basis, both below the analyst estimate. Industrial production also fell short of estimates on both a monthly and annual basis. GDP figures were in line with expectations, showing 0.2% growth in the second quarter.
Although EUR/USD is in a range, the near-term directional basis seems to have shifted to the downside considering the many failed attempts at overhead resistance.
Keep in mind, the pair posted a reversal candlestick on a weekly chart as a result of the rally last week. This pattern stands to keep dips bought.
On a 4-hour chart, the pair has been trading between the 100 and 200 moving averages. Despite the slight weakness today, the range remains intact. There is a horizontal level near the 100 MA at 1.1155. This horizontal level previously acted as resistance and creates a bit of a confluence.
If the pair does manage to get below it, keep in mind there is a big level at 1.1118 that has been respected on many downside attempts this year.
- Although there have been some events that have moved the markets, EUR/USD remains stuck in a range.
- Dips in the pair are likely to be bough considering the reversal pattern on a weekly chart.
This article was originally posted on FX Empire
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