Trade Wars to Drive the EUR/USD

EUR/USD Analysis 9 April 2018

EUR/USD Spot Price: 1.2275

Support: 1.2250, 1.2200, 1.2150

Resistance: 1.2350, 1.2450, 1.250

Trade Ideas - The EUR/USD is Battling Support

  • Position: Long
  • Entry Point: 1.2250
  • Stop Loss: 1.2150
  • Take Profit: 1.2350

The EUR/USD continues to be held up by the weak USD and market uncertainty. We can look to enter a long position at 1.2200 and target a move back to 1.2350. While 1.2200 is strong support so we can place our stop loss below.

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EUR/USD 240 min Chart - EUR/USD is Battling Support

Volatile Times in World Markets

The trade war between China and the US began when US President Donald Trump, looked to impose tariffs on a range of Chinese products. Trump is taking a stand against China and their flagrant abuse of intellectual property rights He is looking for the Chinese leaders to be proactive on the situation.

Instead the Chinese simply decided to impose tariffs of their own. After the markets cooled off, Trump raised the stakes and doubled down on the scope of proposed US tariffs. This has shaken equity markets and it continues to hurt the USD.

The EUR/USD had been weaker after much of the rhetoric had subsided, until Trump came out with the increase on Friday.

For the most part, the EUR/USD has avoided much of the carnage that we’ve seen in other markets. It has been trading in a tight range for the last few months. Theoretically the USD should be rising given the fact that rates in the US are on the up. However, the US-China saga is hurting the USD. And at the same time it is propping up the EUR/USD.

Key Economic Data

There are a number of key data releases this week, however, they might all be overshadowed by anything the US President has to say.

We will get the minutes from both the FOMC and ECB. There hasn’t been any new developments from the ECB in multiple months so we expect little to change in the minutes. The FOMC recently raised rates in the US so we will need to be watching what they have in store for the rest of the year. There is currently an 85% chance of a rate hike in June.

We also get a snapshot of inflation with CPI and PPI. The US is quickly moving towards its target band of above 2% and this will give plenty of scope for the Federal Reserve and Jerome Powell to raise interest rates multiple times this year.

Technical Levels

The EUR/USD continues to maintain a tight range despite the headlines elsewhere. We tested 1.2250 on Friday, but the USD fell away and there wasn’t any follow-through.

Beneath that we have a big support level at 1.2200, which has been in place for some time. Given the uncertainty in the US at the moment, it’s difficult to see the USD getting enough momentum to take out any of the key support levels in the EUR/USD. Which might be a good opportunity for some long positions.

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EUR/USD - Key Levels

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