EUR/USD Losing Ground Amid Increased Trade Tensions, FOMC Minutes Eyed

Euro slips vs USD as trade deal hopes slip and FOMC minutes move into focus.

The pair ended the previous session flat at $1.1078 and is trending lower in early trade on Wednesday, as investors digest the latest in trade headlines whilst looking ahead to the release of the FOMC minutes later today and ECB minutes to be released tomorrow.

Risk sentiment has crept up boosting the safe haven dollar as doubts continue to grow over the ability of the US and China to agree a phase one trade deal. Moves by the US Senate, passing a bill supporting the pro-Democracy protesters in Hong Kong will only aggravate an already very fragile US – China relationship as will Trump’s threats of further tariff if no deal is done.

FOMC Minutes
Dollar traders will now look ahead to the release of the FOMC minutes. Traders will be keen to see the deliberations from the meeting 30th October where the Fed cut interest rates for a third and final time in this cycle. The minutes come following two testimonies by Fed Chair Powell in Congress, which means that they could be considered slightly old hat and are unlikely to create any major moves in the market.

Slowdown Concerns Still Haunt Euro
Euro investors are still grappling with disappointing data after Eurozone construction output missed forecasts and German producer prices also fell short of expectations. Whilst eurozone economic growth remained fairly resilient in the third quarter, concerns remain over whether the bloc can eek out another quarter of growth at the end of the year.
The release of the OECD economic outlook is expected to confirm lacklustre growth in the eurozone. The latest OECD economic projections report back in September pointed to a mere 1.1% growth in 2020 and 1% growth in 2021. The report could reinforce slowdown fears.

ECB Minutes
Looking ahead minutes from the ECB meeting will be eyed closely amid growing unease within the central bank over unlimited quantitative easing. Should the discussions show an increasing resistance to the ongoing easing programme, the euro could receive a boost. Then it will be up to Christine Lagarde to pull governments on-board for a boost in fiscal stimulus.

Levels to watch:
The pair has failed to hold onto to the uptrend which started early October. In failing, the pair has broken through 100 & 50 sma on 4 hr chart, a bearish sign although the 200 sma remains intact.
Immediate support can be seen at $1.1055, prior to $1.1045 and $1.1015. On the upside resistance is seen at $1.1090, $1.1110 before $1.1130.

Disclaimer: The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.

Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex and commodity futures, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to or GAIN Capital refer to GAIN Capital Holdings Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.

Open an Account