EUR/USD: Negative Dynamics Prevail
Yuri Papshev | Nov 12, 2019 08:23AM ET
Eurodollar could not develop an upward trend above the marks reached last month near the resistance level of 1.1180.
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The likelihood of a quick resolution to the US-China trade agreement has again been delayed. Market participants await Donald Trump's decision on whether to impose 25% duties on European cars and components imported for their assembly into the United States.
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Against the background of the ongoing US trade conflict with China, the introduction of these duties would become a significant aggravation of the global trade situation and would make an additional contribution to the slowdown of the global economy.
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The role of the dollar as a defensive asset again comes to the forefront. The US economy appears more resilient amid a general slowdown in the global economy. In the first quarter of 2019, US GDP growth amounted to 3.1% (in annual terms), in the second - 2%, in the third quarter - 1.9%.
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Now market participants will follow the publication on Thursday (at 07:00 and 10:00 GMT) of GDP data for Germany and the Eurozone.
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German GDP growth is expected to slow again (-0.1% after a similar fall in the 2nd quarter). An updated estimate of the Eurozone GDP for the third quarter suggests an increase of 0.2% (+1.1% in annual terms). Despite the positive data, this is significantly lower than the growth rate of the American economy.
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Meanwhile, the DXY dollar index continues to grow. At the beginning of the European session, DXY dollar index futures were trading at 98.17, 20 pips above the opening price earlier this month.
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The growing yield of US government bonds is also supporting the dollar.
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So, the yield on 10-year US bonds is 1.938% at the time of writing, versus 1.691% at the beginning of the month.
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Thus, the EUR / USD pair will remain under pressure in the medium term.
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In general, below the key resistance level of 1.1180 (ЕМА200 on the daily chart), the long-term negative dynamics of EUR / USD remains, which speaks in favor of sales of this currency pair.
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Below the resistance level of 1.1070 (ЕМА200 on the 1-hour, 4-hour charts, ЕМА50 on the daily chart), only short positions should be considered.
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Support Levels: 1.1000, 1.0940, 1.0900, 1.0850
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Resistance Levels: 1.1070, 1.1110, 1.1135, 1.1180
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Trading Recommendations
Sell by market. Stop-Loss 1.1050. Take-Profit 1.1000, 1.0940, 1.0900, 1.0850 Buy Stop 1.1080. Stop-Loss 1.1050. Take-Profit 1.1110, 1.1135, 1.1180
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