Fundamental analytics

EUR / USD: bullish signals prevail


The EUR / USD pair completed the trading week with a fairly confident growth against the background of a large-scale weakening of the US currency, but the bulls did not manage to win back all the losses and at the end of five trading days the result was -0.29%.

The pressure on the US currency had an unexpected decision by Trump to impose increased duties on Mexican goods, due to problems with migrants. Investors fear that Trump’s aggressive protectionist policies could seriously damage the US economy. The discontent with the policy of the White House expressed also in the Fed. According to the regulator, new tariffs on Mexican imports will increase uncertainty and will hit the growth of the United States economy. Some experts say that a further escalation of trade conflicts could lead to a decrease in the Fed's interest rates, although investors are still not taking into account this scenario in the market value of the US currency.

Against this background, experts at Goldman Sachs revised the forecast for US economic growth in the 2nd quarter from 1.3% to 1.1%, fearing a large-scale trade war. On Sunday, the Chinese government announced that the country was ready to wage a trade war, but the authorities still hoped that the United States would resume negotiations to resolve the conflict.

Today, news related to the situation in international trade will remain the focus of the market. In addition, trading data for the manufacturing sector in the United States and Europe may affect trading.

The graph is now fighting for the level of 1.1180. In case of its breakdown, the bulls will be able to count on the continuation of the upward movement in the direction of levels 1.1220 and 1.1260. Sales will be relevant in case of price rebound from 1.1180.

· Resistance levels: 1.1180, 1.1220, 1.1260.

· Support levels: 1.1130, 1.1100, 1.1050.

The main scenario is the breakdown of resistance at 1.1180 and an increase to 1.1220.

Alternative scenario - consolidation below 1.1180 and decline to 1.1130.

The fundamental background for the currency pair remains moderately positive. On the chart, bullish signals dominate locally. Therefore, within the day we consider longs that should be looked at at 1.1170.


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