On Wednesday the 11th of July, trading on the euro closed down. The euro swung all over in the European session, and the daily candlestick closed below 1.17. The dollar, pound, and the euro were heavily influenced by the uncertainty in Britain over Brexit and sell-offs of risky assets amid the escalating trade conflict between the US and China.
Due to China's countermeasures in response to new US trade restrictions on Chinese imports, the US is considering imposing new tariffs on 200bn USD worth of goods. A spokesman for the Chinese Ministry of Commerce said today that he was shocked by what is happening and expressed a lack of understanding as to why the US changed its position after the May talks, after which all media wrote that the trade war had been suspended.
Day's news (GMT 3):
- 11:30 UK: BOE credit conditions survey.
- 12:00 Eurozone: industrial production (MoM) (May).
- 14:30 Eurozone: ECB monetary policy meeting accounts.
- 15:30 Canada: new housing price index (MoM) (May).
- 15:30 US: CPI (MoM) (Jun), initial jobless claims (Jul 2), FOMC member Kashkari speech.
- 21:00 US: monthly budget statement (Jun).
Fig 1. EURUSD hourly chart. Source: TradingView
From a maximum of 1.1758, the euro dropped to 1.1665. The adjusted trend line didn't manage to hold at 1.1695. The 67th degree served as a temporary support for the euro, and the pair has been in a sideways trend for 13 hours. The range is very narrow, so there is a risk that it could drop to 1.1650. The stochastic oscillator is at the top in the sell zone.
Given Trump's claims, sellers could easily go down to 1.1623. A surge in volatility in the euro market is expected at 14:30 (GMT 3), when the ECB meeting minutes will be issued. The economic calendar for Thursday is meager, so news from China and the United States are sure to have an impact.