EUR/USD gets the memo, hits high resistance

The scandals surrounding US President Donald Trump continue engulfing the US dollar. The most recent talking point is the Comey memo, but the disclosure of sensitive information to the Russians is weighing as well.

For EUR/USD, this means a move higher to a new high of 1.1116, just at the line of resistance and above the uptrend channel.

Here are some updates:

Comey memo implies a Trump obstruction

A week has passed since Trump fired the FBI Director James Comey. The move was originally justified using a recommendation by the deputy General Attorney and due to  Comey’s mishandling of the Clinton email affairs. However, Trump undermined the damage control by saying it was his decision from the outset and that he didn’t like Comey’s  investigation of a potential collision between Trump and Russia ahead of the election.

The latest in this episode is a report that Comey documented all the sensitive conversations with Comey in memos. These memos show that Trump asked Comey to  stop investigating Michael Flynn, the disgraced National Security Adviser that Trump was forced to fire and may be a key actor in the Russia affair.

Such an intervention sounds like an obstruction of justice.

Trump risked an Israeli spy

The second scandal involves Trump’s disclosure of sensitive classified information to the Russian Foreign Minister.  After shaking hands in front of only the Russian press, Trump revealed sensitive information about a potential terror threat to Lavrov.

According to the reports that are emerging, the intel relates to a threat of ISIS bombing a plane using a laptop. The source is thought to be an Israeli spy within the ranks of the radical Islamic organization. And according to ABC, Israel  gave the information on condition it would not be disclosed. Russia is an ally of Iran, an adversary of Israel. The disclosure by Trump risks the spy.

Doubts about the Trump agenda, EUR/USD breaks higher

The White House is in damage control mode for quite a while. There are reports of internal infighting in the Trump team. Various Republican politicians cast doubt about the recent shenanigans and call the White House to get its act together.

The attention on the scandals shifts the focus away from reforms that markets want: tax reform and infrastructure spending. Even the healthcare bill has been out of the limelight. Some see a passage of the AHCA as a prerequisite  for tax reform.

On this background, the dollar loses ground across the board. The Trump rally is being derailed.

EUR/USD has reached a new high at 1.1116. This is just 4 pips below the critical resistance line of 1.1120. That was a double-bottom back in September and October. When the pair slipped under 1.1120, it fell all the way to 1.0850.

Yet also at the current level, we are above the uptrend channel that accompanied the pair since the beginning of the year.

Further resistance awaits only at 1.13, the temporary high that followed the US elections. Support is at 1.1050.

More:

• EUR/USD: ‘Keep The Faith’ In A Decisive Break Higher – NAB
• EUR/USD at 1.11 – can it continue higher?