EUR/USD Is Neutral
The EUR/USD is not changing a lot early this week, with the last week Friday being very volatile.
On Thursday, the ECB decided to minimize its QE from Oct to Dec, and then to cut the QE completely, which pushed the EUR up. On Fri, everything changed, as the greenback got supported by a sharp increase in the US bond prices and the safe haven assets becoming in-demand, as the US is again going to impose new customs duties on Chinese goods.
The market will be focused on the trade war between the US and China, as the US may announce new customs duties as early as this Monday, which may make China refuse the scheduled trading terms talks. This is likely to maintain the investor interest towards the safe haven instruments.
As for the ECB meeting, Mario Draghi’s tone was somewhat hawkish. The European Central Bank governor says there has been less uncertainty in inflation forecasts, and this is good. He is sure that the QE may come to an end this year. The Eurozone economy is going to rise by 2% this year and by 1.8% next, which is somewhat lower than expected, but still quite good in case no stimulus remains.
Meanwhile, the Fed meeting is scheduled in around 10 days, so the EUR/USD still has some time to get stable.
Technically, the EUR/USD is trading within another rising wave, which started after the pair broke out the downtrend resistance. The price managed to reach the projection channel resistance area and attempted to approach to the current high. The downtrend that followed was none other than correction, so once it was over, the pair started rising again. The immediate target is now $1.1705, and then the major high at $1.1734. Conversely, if the price manages to break out the support at $1.1617, the pair may go down to reach another support at $1.1617.
This article was written by Dmitriy Gurkovskiy, a Chief Analyst at RoboForex
This article was originally posted on FX Empire
