There are multiple factors weighing on the EUR/USD today. We have seen a broad dollar rally, suggesting that the trade agreements are seen as net positive for the US economy, even it means rising inflation risks. With higher tariffs and Trump’s inflationary fiscal agenda, interest rates in the US are likely to remain elevated for longer.
As far as the euro itself is concerned, the single currency fell all major currencies, which suggests investors were not impressed by the EU’s negotiation tactics. Accepting a 15% tariff on most of its exports to the US while reducing levies on some American products to zero, means the deal will make companies in Europe less competitive. Still, it could have been a far worse situation had we seen a trade war similar to the US-China situation in April. It means that there is now some stability and businesses can get on with things. On balance, though, European leaders will feel that they may have compromised a little too much.
Technically, the EUR/USD is still not in a bearish trend despite today’s sizeable drop. But that could change if the bullish trend line breaks now. If that happens 1.15 could be the next stop. Resistance is now 1.1650 followed by 1.1700.
By Fawad Razaqzada, market analyst with FOREX.com
As far as the euro itself is concerned, the single currency fell all major currencies, which suggests investors were not impressed by the EU’s negotiation tactics. Accepting a 15% tariff on most of its exports to the US while reducing levies on some American products to zero, means the deal will make companies in Europe less competitive. Still, it could have been a far worse situation had we seen a trade war similar to the US-China situation in April. It means that there is now some stability and businesses can get on with things. On balance, though, European leaders will feel that they may have compromised a little too much.
Technically, the EUR/USD is still not in a bearish trend despite today’s sizeable drop. But that could change if the bullish trend line breaks now. If that happens 1.15 could be the next stop. Resistance is now 1.1650 followed by 1.1700.
By Fawad Razaqzada, market analyst with FOREX.com
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Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.