EUR/USD Being Steady, Trade Wars Are in Focus

By Tuesday, the EUR/USD has stabilized after the volatile previous week. The market is now looking for support. The major pair is still near the 4-month highs, with the last week high at 1.1802.

The US economic reports came mixed. Housing starts got up by 9.2% MoM, reaching 1.282M homes, which beat expectations by far; still, the next news release wiped off any positive effects, as the building permits in August decreased by 5.7% MoM, being just 1.229M. This result was the weakest in more than 12 months.

Last Thursday, the euro was rising heavily reaching the 4-month highs after the dollar index started falling, despite the treasury yields growing and good jobless claims data coming out.

The trade conflicts between the US and China are still in focus for the investors. The Chinese government response was not that hard as the market players expected, which made their risk appetite go up again. Today Sep 24, both the US and China are bringing in their additional customs duties, which creates some tensions in the market. Meanwhile, people are discussing that Beijing may decline the scheduled talks on trade relations with the US. If this is the case, this will be a heavy strike against the Republicans and Trump in particular. For now, however, an unexplainable euphoria is reigning in the markets. China refusing to talk nevertheless means that the trade war is becoming hotter and there’s no way back.

On H1, the EURUSD is continuing to form a midterm correctional uptrend. The movement is steady, with some reasons for speeding up, too. The nearest target is the major channel resistance, which is the latest high at the same time, located at 1.1816. After breaking it out, the price may attack the short term uptrend resistance at 1.1850. The local support is at 1.1730, while the major one is at 1.1700. Local support breakout is also possible, and once 1.1730 gets broken out, the price may further go down to reach not only the major support at 1.1700 but also the projection support at 1.1650.