EUR/USD Forecast: trade deal would be “very good” for global growth
|EUR/USD Current Price: 1.1116
- US Treasury Secretary Mnuchin to provide details on phase one of the trade deal.
- Markit will release the preliminary estimates of its PMI for both economies this Monday.
- EUR/USD at risk of losing further ground on a break below 1.1065.
After flirting with 1.120 and reaching a 1-month high, the EUR/USD pair trimmed half of its weekly gains on Friday, ending the day in the red at 1.1116. The dollar tumbled on uncertainty, amid contradictory headlines related to the trade deal between the US and China, later soaring on the back of news indicating that phase one of a trade deal between both economies was reached. Over the weekend, China announced it suspended additional tariffs on the US meant to be implemented this Monday, while the US is expected to do the same, after agreeing to long purchases of US goods, mostly agricultural.
US Treasury Secretary Mnuchin said that details about the deal will soon be released, adding that the new trade relationship with China would be “very good” for global growth, adding that phase two of negotiations will begin immediately. Speaking of which, Markit will release the preliminary estimates of December PMI this Monday for most major economies. For sure, the effects of the trade deal in the world’s economies will take some time to be shown, and investors will likely kick-start the week with optimism, less concerned about numbers have to say, at least for now.
EUR/USD short-term technical outlook
The EUR/USD pair retreated from a multi-week high of 1.1199, a few pips below the 61.8% retracement of its latest daily slump, ending the week below the 50% retracement of the same decline. The daily chart shows that the pair was unable to sustain gains beyond a mild-bearish 200 DMA but holds above the 20 and 100 DMA, both converging around 1.1060. Technical indicators have lost their strength upward but hold within positive levels. In the shorter-term, and according to the 4-hour chart, the downward potential is also limited, as the pair settled a few pips below a still bullish 20 SMA, while technical indicators retreated from overbought readings to settle in neutral levels. The pair would turn bearish only with a break below the mentioned 1.1060 price zone.
Support levels: 1.1100 1.1065 1.1030
Resistance levels: 1.1145 1.1180 1.1210
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