On Monday the 13th of May, trading on the EURUSD pair closed down. In the US session, however, the pair rose to 1.1264. The bulls managed to break above the 1.1250 resistance by 14 pips. I reckon the sharp decline was brought about by increased tensions in the US-China trade conflict. This provided a boost to the yen, Swiss franc, and gold. Chinese authorities have announced import tariffs on 60bn USD of US goods set to take effect on the 1st of June. The tariffs will be increased from 5% to 25%.
Head of the Boston Fed Eric Rosengren said yesterday that the biggest potential risk to the global economy is the ongoing trade conflict between the US and China.
Day’s news (GMT+3):
Expectations of a test of 1.1250 were met. The pair is now trading around the balance line at 1.1239. Yesterday’s daily bar with a long tail is a bearish signal. We could see a 50 – 61% movement against this bar. As such, I expect a drop from 1.1250 to 1.1211 (45 degrees).
Despite my expectations that the euro would decline against the dollar, the bullish trend on the hourly timeframe remains intact. The trend line runs below the 45th degree. If we don’t see a retreat from risky assets, this should keep the bears at bay.
There are no significant data releases planned for today. All eyes are on Donald Trump’s Twitter account, which is where the market will get its direction from.