The euro is higher on dollar weakness after U.S. factories extended their contraction. However, political uncertainty in Germany and a burgeoning European trade war with the U.S. is weighing on the single currency. And despite the gains of the past four days, the
EUR/USD is facing a downward trajectory as the pressure increases.
U.S. President Donald Trump now clearly has Europe in his crosshairs after slapping Argentina and Brazil with steel tariffs. Meanwhile, the potential split of Germany's ruling coalition increases political uncertainty for Europe’s growth engine, while pressing down
further on the common currency.
From a technical perspective, as well, the euro’s risk is to the downside.
While the euro managed to remain above the 100 DMA for the second day, which is a sign of demand, it remains below the November highs, beneath the 1.1100 levels that has acted as a support and resistance area since Apr 26th.
Moreover, this local resistance is within the backdrop of a long-term downtrend since the February 2018 top, further accentuated and framed within a falling channel since August 2018.
Taken together, this is a strong indication that supply-demand pressure is downward.
- The Macro Strategist Team
EUR/USD is facing a downward trajectory as the pressure increases.
U.S. President Donald Trump now clearly has Europe in his crosshairs after slapping Argentina and Brazil with steel tariffs. Meanwhile, the potential split of Germany's ruling coalition increases political uncertainty for Europe’s growth engine, while pressing down
further on the common currency.
From a technical perspective, as well, the euro’s risk is to the downside.
While the euro managed to remain above the 100 DMA for the second day, which is a sign of demand, it remains below the November highs, beneath the 1.1100 levels that has acted as a support and resistance area since Apr 26th.
Moreover, this local resistance is within the backdrop of a long-term downtrend since the February 2018 top, further accentuated and framed within a falling channel since August 2018.
Taken together, this is a strong indication that supply-demand pressure is downward.
- The Macro Strategist Team