EUR/USD analysis: Trump resolute to weaken the USD?
|EUR/USD Current price: 1.1720
- US President Trump condemned Fed's hawkish stance, triggering a dollar's sell-off.
- ECB's monetary policy meeting taking center stage this week.
The EUR/USD pair finished the week up at 1.1720, as the dollar entered sell-off mode Thursday, when US President Trump criticized Fed's hawkish stance on rates, indicating that higher rates, dent the growing economy. The greenback attempted to regain some ground on Friday, but more comments from Trump triggered another round of selling. Trump escalated the trade war, saying that he is "ready to go for 500," referring to impose tariffs to the whole amount of Chinese imports the US had last year. Furthermore, he complained by twitter that higher rates and a stronger dollar were taking away their competitive edge. " Tightening now hurts all that we have done," he said. His comments, targeting the main reason of dollar's strength, that is, central banks' divergences, may have little influence on monetary policy, but for sure hurt dollar's bulls determination.
This week has quite an entertained macroeconomic calendar, with the ECB monetary policy meeting Thursday outstanding. Also, Markit will release preliminary July indexes for both economies, while by the end of the week US Q2 preliminary GDP will be out. This Monday, US Existing Home Sales and EU Consumer Confidence will be out. Nevertheless, political jitters will likely keep overshadowing macroeconomic headlines.
The EUR/USD pair is at the upper end of its latest range, having spent the last three weeks hovering around the current 1.1720 level, the 23.6% retracement of its April/May decline. The highest in the previous two months have been 1.1851, a couple of pips away from the 38.2% retracement of the same decline, this high, achieved during the June ECB's meeting, and a line in the sand for bears, as they will probably give up on a break above the level. The pair is neutral according to the daily chart, developing well below a bearish 100 DMA and hovering around a flat 20 SMA, while technical indicators aim modestly higher around their midlines, without enough strength to confirm additional gains ahead. Shorter term, and according to the 4 hours chart, moving averages are below the current level, but still confined to a tight range and directionless, reflecting the absence of a trend, while technical indicators retreat after nearing overbought readings. The pair has several intraday highs in the 1.1740/50 region, the level to surpass to confirm a more bullish constructive outlook.
Support levels: 1.1695 1.1650 1.1620
Resistance levels: 1.1750 1.1790 1.1825
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