- EUR/USD's bounce from Tuesday's low seems to have stalled near 1.1135.
- The EU-US trade issues could keep the common currency under pressure.
- The pair is trapped in a two-week-long bearish channel.
EUR/USD has regained some poise in the last 12 hours or so but is still trapped in a bearish channel amid the increasing fears of the EU-US trade war.
The single currency picked up a bid at lows near 1.11 during the US trading hours on Tuesday and rose to a high of 1.1135. The bounce, however, ran out of steam in Asia, leaving the pair sidelined near the 50-hour average support at 1.1130.
EU, US bracing up for a trade war?
European Union’s (EU) new trade chief Phil Hogan is due to meet US Trade Representative Robert Lighthizer and other American officials during a Jan. 14-16, according to Bloomberg.
During the visit, Hogan will try to settle the dispute over France’s new digital services tax, European support for Boeing’s chief rival, Airbus and other differences. Experts, however, believe it won't be smooth sailing for Hogan, as both the administration and Congress are frustrated due to the EU’s refusal to negotiate with the US on agriculture, according to Politico.
Hosuk Lee-Makiyama, director of the European Centre of International Political Economy in Brussels, thinks there will be a lot of fireworks before any underlying progress is made in resolving US-EU policy differences over trade.
As a result, the euro is unlikely to score big gains this week. The common currency, however, may find some love if the Eurozone Industrial Production data, due at 10:00 GMT, blows past expectations.
Trapped in a falling channel
The pair is stuck in a falling channel represented by trendlines connecting Dec 31 and Jan. 7 highs and Jan. 3 and Jan. 9 lows.
A convincing breakout would open the doors for a re-test of recent highs near 1.1240.
Technical levels
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD fluctuates in daily range above 1.0600
EUR/USD struggles to gather directional momentum and continues to fluctuate above 1.0600 on Tuesday. The modest improvement seen in risk mood limits the US Dollar's gains as investors await Fed Chairman Jerome Powell's speech.
GBP/USD stabilizes near 1.2450 ahead of Powell speech
GBP/USD holds steady at around 1.2450 after recovering from the multi-month low it touched near 1.2400 in the European morning. The USD struggles to gather strength after disappointing housing data. Market focus shifts to Fed Chairman Powell's appearance.
Gold retreats to $2,370 as US yields push higher
Gold stages a correction on Tuesday and fluctuates in negative territory near $2,370 following Monday's upsurge. The benchmark 10-year US Treasury bond yield continues to push higher above 4.6% and makes it difficult for XAU/USD to gain traction.
XRP struggles below $0.50 resistance as SEC vs. Ripple lawsuit likely to enter final pretrial conference
XRP is struggling with resistance at $0.50 as Ripple and the US Securities and Exchange Commission (SEC) are gearing up for the final pretrial conference on Tuesday at a New York court.
US outperformance continues
The economic divergence between the US and the rest of the world has become increasingly pronounced. The latest US inflation prints highlight that underlying inflation pressures seemingly remain stickier than in most other parts of the world.