EUR/USD: Lose-Lose Situation With Every Trade Headline

FXStreet  |

iStock.com/panida wijitpanya

  • EUR/USD is struggling amid contradicting US-Sino headlines.
  • Further trade headlines and US consumer confidence are eyed.
  • Friday's EUR/USD chart is showing room for further, albeit limited falls.

"Heads I win, tails, you lose" – that is what EUR/USD bears may be feeling. Contradicting trade headlines are rocking markets in both directions – but the world's most popular currency pair seems to have only one destiny – down. It is trading at the lowest level in three weeks.

White House officials may be playing "Good cop, bad cop" – but are only exposing the internal debate within the administration. Larry Kudlow has said that the world's largest economies are nearing an agreement and ready to make concessions. However, Kudlow tends to be the optimist, and his words were contradicted by Peter Navarro – a China hawk. Navarro stated that nothing has been agreed and that Trump will have the final say.

The thorny issue is China's demand for the US to commit to undoing all rounds of tariffs. The US would like to maintain the threat of tariffs until a full agreement is reached. Early on Thursday, Chinese Commerce Minister Gao Fend announced that an accord was reached, but Trump has yet to respond. The president's uncharacteristic silence also reflects uncertainty.

Euro-zone lags behind the US

Euro/dollar is suffering from uncertainty. While a trade deal may boost German exports to China – which have been under stress – it also lowers the chances of another rate cut in the US.

This lose-lose situation may also be attributed to the European Commission's downgrade of the outlook for the euro-zone. Growth is expected to stand at 1.1% this year and 1.2% in 2020, lower than previous projections. The common currency remains pressured.

European weakness contrasts with upbeat economic figures from the US. The blockbuster Non-Farm Payrolls was followed by a jump in the ISM Non-Manufacturing Purchasing Managers' Index. And now, another forward-looking indicator is eyed.

The preliminary Consumer Sentiment Index from the University of Michigan carries expectations for a small increase – implying the American shopper would continue pulling the economy forward.

Overall, trade headlines, US consumer sentiment, and concerns about the European economies are set to dominate trading today.

EUR/USD Technical Analysis – Another support is lost

EUR USD Technical analysis November 8 2019

Euro/dollar has dropped below the 200 Simple Moving Average – extending its misery. It had previously dropped below the 50 and 100 SMAs. Momentum remains to the downside. However, the Relative Strength Index is flirting with 30 – thus entering oversold conditions. That signals that the next leg down for EUR/USD may be limited and perhaps followed by a bounce.

Support awaits at 1.10, a psychologically significant level and a former quadruple top. Next, we find the early October low of 1.0940, followed by the swing low of 1.0905. The 2019 trough of 1.10879 is next.

Resistance awaits at 1.1055, which has separated ranges in recent sessions. Next, we find 1.1090 that was a stubborn cap. 1.1110 and 1.1130 were swing lows in early November.

___

Equities Contributor: FXStreet

Source: Equities News

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: http://www.equities.com/disclaimer.

Comments

Watchlist

Symbol Last Price Change % Change
AAPL

     
AMZN

     
HD

     
JPM

     
IBM

     
BA

     
WMT

     
DIS

     
GOOG

     
XOM

     
BRK.A

     
FB

     
JNJ

     
WFC

     
T

     
NFLX

     
TSLA

     
V

     
UNH

     
PG

     

Blockchain in Healthcare - Discussion at the EU Parliament

From the recent Blockchain For Europe Summit in Brussels: Panel on Digital Health - How Blockchain technology can make health care systems more patient-centric and sustainable