On Monday the 6th of May, trading on the EURUSD pair closed down by 1 pip on Friday’s value, although the day’s candlestick had a bullish body. This was made possible due to the price gap, as trading opened down on Friday’s closing price. An escalation to the trading conflict between the US and China has prompted a retreat to the safe havens.
US President Donald Trump announced that tariffs would be increased from 10% to 25% on 200bn USD of Chinese goods on Friday. This got a negative reaction from China.
Robert Lighthizer, the US Trade Representative, said that China’s backtracking on previous commitments was responsible for Trump’s tweet. China is expected to send a delegation to Washington for further talks.
The euro was the day’s biggest winner against the dollar with help from the crosses. Demand for the euro crosses surged after the release of Eurozone data and the pound’s drop. After closing the price gap, the pair hovered around 1.1190.
Day’s news (GMT+3):
- 17:00 Canada: Ivey PMI (Apr).
- 17:00 US: JOLTS job openings (Mar).
- 18:35 US: Fed’s Quarles speech.
- 19:30 UK: BoE’s Haldane speech.
- 22:00 US: consumer credit change (Mar).
The euro is recovering via a saw tooth model. Considering that many of the majors suffered a 0.5% decline yesterday, while the euro didn’t, I expect the single currency to drop to the LB in the first half of today’s European session. The technical picture still indicates a rise to 1.1280. The 67th degree is providing support, so considering how the stochastic is set up, it’s better to hold off on long positions until we get to the LB.