The currency pair EUR / USD on Wednesday was unable to continue the positive movement dynamics and ended the trading day with a decline of 0.2%. At the same time, there is high uncertainty globally on the market, since both the euro and the dollar are now under pressure by a large number of important fundamental factors.
The main problems of the European currency are still associated with the deterioration of the economic situation in the EU and high domestic political tensions. An additional pressure factor is the uncertainty associated with Brexit.
The dollar is also experiencing significant difficulties with the background of changes in the Fed's rhetoric, signs of a slowing economy and a decrease in geopolitical and trade tensions. Yesterday, statements by Fed Chairman Jerome Powell were about to provide short-term support for the national currency about the imminent voicing of plans to complete the balance-reduction cycle, which accumulated assets worth $ 4 trillion. But, apparently, investors very quickly worked out the news and today the dollar is under pressure again.
First, the market continues to receive optimistic news about the course of trade negotiations between the United States and China. US Trade Representative Robert Lightheiser announced that the United States refused to increase duties on goods from China from March 1 from 10% to 25%. Investors see this as a signal of a possible establishment of a trade agreement between the parties. With this background, the dollar is not popular among investors as a defensive asset.
Secondly, long-awaited data on the dynamics of US GDP growth for the fourth quarter of 2018 will be made public today. Due to the shutdown, the publication of the data was postponed to a later date. Experts predict the release of weaker data, which can have a very strong negative impact on the US currency.
In Europe, as in previous days, there will not be much economic news. Only preliminary data on the consumer price index in Germany and a large block of statistics from France, including GDP data, can have a short-term moderate impact on trading.
On the chart, after testing resistance at 1.1400, a rolling back movement develops, which can be continued in the first half of the day. Locally, the price is restricted by the level of 1.1380, from which we can expect a decrease in quotations to the range of 1.1340-1.1360, where, in our opinion, we should expect the formation of a reversal and the resuming upward movement in the direction of the level of 1.1500.
Resistance Levels: 1.1380, 1.1400, 1.1500.
Levels of support: 1.1360, 1.1320, 1.1280.
The main scenario is a decline to 1.1350 and an than growth to 1.1400.
An alternative scenario - consolidation below 1.1350 and decline to 1.1320.
News background remains mixed and very controversial. The graph shows also very ambiguous situation. Locally, the downward trend prevails, but at higher intervals, the scenario with an increase in quotations seems to be of higher priority. Therefore, today we recommend to give preference to longs that are worth looking for in the range of 1.1340-1.1360.
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