Euro: USD/EUR (EUR=X) Plagued by US-China Trade Tensions and Recession Fears
The US Dollar (USD) also began the week down against many of its peers as US-China trade tensions weighed on sentiment in the ‘Greenback’.
Economists at Goldman Sachs also commented that the US economy could face a recession if the superpowers fail to concede on a trade deal in the near term. They said:
‘We expect tariffs targeting the remaining $300bn of US imports from China to go into effect. Overall, we have increased our estimate of the growth impact of the trade war.’
USD also benefited from Tuesday’s publication of the US inflation figure for July, which beat forecasts and rose from 2.1% to 2.2%.
Month-on-month figures also improved, edging higher from 0.2% to 0.3%.
Katia Dmitrieva, an Economy Reporter at Bloomberg, said:
‘A key measure of U.S. consumer prices unexpectedly accelerated in July in a broad-based advance, signaling inflation may be firming as the Federal Reserve debates whether to lower interest rates further.’
The US Dollar benefited slightly from US President Donald Trump’s announcement on Wednesday that he would delay tariffs on Chinese imports until December 15.
However, as China failed to show a surge in buying US agriculture products, this left US Dollar traders remaining jittery on fears of a recession.
USD failed to make any notable gains on the Euro despite Thursday’s US retail sales figures for July, which exceeded forecasts and rose from 0.7% to 1%.
Analysts at Reuters said:
‘U.S. retail sales surged in July as consumers bought a range of goods even as they cut back on motor vehicle purchases, which could help to assuage financial markets’ concerns that the economy was heading into recession.’
The US Dollar closed the week a little weaker following the flash Michigan Consumer Sentiment Index for August, which came in worse than expected, shrinking from 98.4 to 92.1.
EUR/USD Exchange Rate Outlook: German Manufacturing Figure in Focus
Euro traders will be looking ahead to Monday’s Eurozone inflation figures for July, which are expected to ease. And with rising fears of Germany facing a technical recession in the third quarter, we could see the Euro sink against the US Dollar as a result.
Meanwhile, Tuesday will see the publication of the German PPI figure for July, which is expected to improve slightly from -0.4% to -0.2%.
US Dollar investors will be looking ahead to Wednesday’s Federal Open Market Committee minutes. Any dovish comments about the outlook for the US economy could considerably weaken the USD/EUR exchange rate.
Friday will see a slew of influential US and Eurozone data.
Any signs of a weakening in the German Markit manufacturing figure for August could further weaken the Euro.
US jobs figures will also be in focus on Friday.
The EUR/USD exchange rate is likely to remain volatile next week, with Brexit and Italian political developments remaining in focus alongside growing fears of a weakening German economy.
Overall, the bias in prices is: Downwards.
The projected upper bound is: 1.12.
The projected lower bound is: 1.10.
The projected closing price is: 1.11.
A black body occurred (because prices closed lower than they opened).
During the past 10 bars, there have been 2 white candles and 7 black candles for a net of 5 black candles. During the past 50 bars, there have been 22 white candles and 27 black candles for a net of 5 black candles.
A spinning top occurred (a spinning top is a candle with a small real body). Spinning tops identify a session in which there is little price action (as defined by the difference between the open and the close). During a rally or near new highs, a spinning top can be a sign that prices are losing momentum and the bulls may be in trouble.
Three black candles occurred in the last three days. Although these candles were not big enough to create three black crows, the steady downward pattern is bearish.
Momentum is a general term used to describe the speed at which prices move over a given time period. Generally, changes in momentum tend to lead to changes in prices. This expert shows the current values of four popular momentum indicators.
One method of interpreting the Stochastic Oscillator is looking for overbought areas (above 80) and oversold areas (below 20). The Stochastic Oscillator is 13.6460. This is an oversold reading. However, a signal is not generated until the Oscillator crosses above 20 The last signal was a sell 7 period(s) ago.
Relative Strength Index (RSI)
The RSI shows overbought (above 70) and oversold (below 30) areas. The current value of the RSI is 37.63. This is not a topping or bottoming area. A buy or sell signal is generated when the RSI moves out of an overbought/oversold area. The last signal was a buy 262 period(s) ago.
Commodity Channel Index (CCI)
The CCI shows overbought (above 100) and oversold (below -100) areas. The current value of the CCI is -84. This is not a topping or bottoming area. The last signal was a buy 11 period(s) ago.
The Moving Average Convergence/Divergence indicator (MACD) gives signals when it crosses its 9 period signal line. The last signal was a sell 1 period(s) ago.
Rex Takasugi – TD Profile
FOREX EUR= closed down -0.000 at 1.109. Volume was 100% below average (consolidating) and Bollinger Bands were 14% narrower than normal.
Open High Low Close Volume___
1.109 1.109 1.109 1.109 20
Short Term: Oversold
Intermediate Term: Bearish
Long Term: Bearish
Moving Averages: 10-period 50-period 200-period
Close: 1.12 1.12 1.13
Volatility: 3 6 7
Volume: 82,705 76,658 118,762
Short-term traders should pay closer attention to buy/sell arrows while intermediate/long-term traders should place greater emphasis on the Bullish or Bearish trend reflected in the lower ribbon.
FOREX EUR= is currently 1.8% below its 200-period moving average and is in an downward trend. Volatility is high as compared to the average volatility over the last 10 periods. Our volume indicators reflect volume flowing into and out of EUR= at a relatively equal pace (neutral). Our trend forecasting oscillators are currently bearish on EUR= and have had this outlook for the last 29 periods.
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