EUR/USD: bulls taking an early lead, 1.1790 next on the cards
- In Tokyo, the euro climbed higher to 1.1747 in the first hourly stick.
- Traders continue to offer the greenback on the back of Trump's accusations that the EU and China of manipulating their currencies and interest rates lower.
EUR/USD rallied to 1.1738 the high, closing at 1.1719 on Friday as the pair traded through the 10, 21 & 55-DMAs last week and is now en route for a test of the July high at this rate, which is located at 1.1790.
Market adjusting and suspecting a full-blown currency war
The market is making further adjustments to the overall positioning in the US dollar, suspecting that the Trump administration is about to ignite a full-on currency war after Trump tweeted his displeasures over the EU and China, calling them out as currency manipulators.
Trump has retaliated by threatening sanctions on $500bln in Chinese exports to the US last year. However, it is worth noting that a full retracement of the USD/CNY’s 2016-18 fall, which is well underway and worth 11.5%, should offset the effect of those tariffs - hence Trump's frustration with rising US rates and USD.
EU’s Moscovici: G20 meeting was not tense, but still trade differences persisted
EUR/USD levels
Analysts at Commerzbank argue that a recovery above 1.1790 will target 1.1855. "Above 1.1855 we look for a deeper retracement to the 1.1930 55 week ma, with scope for the 1.1986 200 day ma, where we suspect that it will fail," the analysts added. Indeed, the daily technicals have shifted in the bulls favour, but only slightly as the longer term outlook is bearish and fundamentally where gains should be tempered by the FED and ECB divergence. Therefore, to the downside, the 200-week moving average is at 1.1390 while 1.1186/1.0814 comes as the 61.8% and 78.6% retracement.
Author
Ross J Burland
FXStreet
Ross J Burland, born in England, UK, is a sportsman at heart. He played Rugby and Judo for his county, Kent and the South East of England Rugby team.
