Despite the tense trade relations between the US and China, EURUSD finished trading up on Tuesday. The dollar index corrected from 95.36 to 94.99.
It was under pressure from the European session and fell against the backdrop of growing 10-year US bonds. I believe that this was a technical rebound in light of an empty economic calendar. Today the calendar is also empty. During today's Asian session, the correction on the dollar index continued.
Day's news (GMT 3):
- 06:05 Australia: RBA Governor Lowe speaks.
- 15:30 Canada: building permits (MoM) (Jun).
- 17:30 USA: crude oil inventories.
- 23:00 New Zealand: RBNZ interest rate decision, monetary policy statement, RBNZ press conference.
- 01:00 New Zealand: RBNZ press conference.
Fig 1. EURUSD hourly chart. Source: TradingView
Expectations were fully justified regarding yesterday's forecast. Growth was held up at the 67th degree, where it sat for 14 hours, then, during the Asian session, bulls broke through it. The euro is trading at 1.1618 against the session high of 1.1620.
The economic calendar is empty. In terms of significant events there's the meeting of the RBNZ. As the meeting is going to take place quite late, it will not affect the euro. All is clear up to 1.1665. The 112th degree will act as a strong resistance and we will see what comes of this in the European session on Thursday.
If you paid attention, then you'll see the euro is fixed at 1.1665 in the form of two triples. At the moment, nothing is preventing the bulls from moving northward. Euro crosses are trading in positive territory. With such a formation, the price should shoot up. A support is passing through 1.1592. A breakout of the channel will quash any growth prospects.
The Trump Administration will impose a 25% tariff on 16bn USD in Chinese goods to the US, starting the 23rd of August. The White House said that tariffs are a response to China's unfair trade practices related to the forced transfer of American technology and intellectual property. As we can see, the trade war has not lead to anything good. With the escalating the trade conflict, market participants are dropping risky assets. Therefore, the growth of the EURUSD pair may end at any time. If buyers reach the level of 1,1660/65 today, that's okay with me.