- EUR/USD has turned lower after the Trump administration finally made their announcements that the US will impose extra tariffs on China from September 24th, around US200bn.
- EUR/USD was trading at 1.1686 and dropped to 1.1670 on the announcements that were already priced in – hence little reaction.
There had been some speculation that Trump would charge just 10% which had the dollar bulls a little wrong-footed but he has scaled in 25% tariffs that will be implemented in December which is likely a tactic to try and persuade China to the negotiating table before they kick in.
Meanwhile, the euro has been building a base and the H&S looks out of the game with the recent advances onto the 1.17 handle and failures down at 1.1530. Moreover, the trade war is actually damaging the confidence of American businesses which are strongly criticizing the tariffs. US data still points to further rate rises although there are signs that consumer spending and inflation is waning and should the manufacturing industry take a turn for the worse, a December hike may well be questionable.
EUR/USD levels
Valeria Bednarik, chief analyst at FXStreet explained the short-technical picture for the pair is positive, although with limited momentum, as in the 4 hours chart, the pair bounced after buying interest defended the 1.1620/30 region, where the 100 SMA in the mentioned chart converges with the 23.% retracement of the August rally:
“In the same chart, the pair is holding above a bullish 20 SMA but technical indicators lost their upward strength and turned lower within positive levels, suggesting that buyers are not ready to push the price through the 1.1730 resistance area, but far from indicating an upcoming bearish leg. A break above this last will probably result in a steeper recovery.”
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