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EUR/USD Price Forecast – EUR/USD Opened Dovish for the Week amid Political Conflicts in Germany

By:
Colin First
Published: Jul 2, 2018, 06:33 UTC

The pair has come under pressure due to geopolitical developments

EURUSD Monday

EURUSD has a soft opening today and has since taken to slow downside movement across majority of Asian market hours. However the downside movement seems to be well above 1.16 handle which suggests that this move lacks fundamental support to act as trigger for change in price trend. The downside movement of the pair comes amid political conflicts in Germany. German coalition government is currently in crisis over disagreement between Horst Seehofer and German Chancellor Angela Merkel, on migration related deal secured by the later in EU summit. While the government is currently stable over Horst Seehofer’s offer to resign from office, CSU hardliners are believed to have tried to talk the combative interior minister into staying.

EURUSD Starts Week on Weak Note

Merkel had hoped to end her standoff with Seehofer and his party by convincing them she had made substantial progress in securing more European cooperation to confront the refugee crisis at last week’s EU summit. While many in the CSU shared Merkel’s assessment of the summit as a breakthrough, Seehofer was more critical, telling Sunday’s party meeting that the results would make little difference on the ground. Seehofer argued that Germany should begin turning back refugees at the border who previously registered in another EU country. Merkel has made it clear she wouldn’t support such a step over concerns that it would trigger the collapse of Europe’s system of open borders and further undermine the bloc’s solidarity.

EURUSD Hourly
EURUSD Hourly

Traders await official press conference scheduled later today for exact updates on how both parties are going to proceed further and if CSU would offer a replacement to maintain coalition government in case of Horst Seehofer resigning from his office.  On release front, investors await Euro zone Manufacturing PMI & Unemployment rate data. US markets will see release of ISM Manufacturing employment and ISM Manufacturing PMI data. EURUSD is expected to trade range bound within 1.16 to 1.17 handle in European session as investors wait for updates from official press meet and an outcome that favors Merkel and coalition government could lead to EURUSD moving back towards 1.18 handle. Expected support and resistance for the pair are at 1.1620 / 1.1600 and 1.1690 / 1.1720 respectively.

About the Author

Colin specializes in developing trading strategies and analyze financial instruments both technically and fundamentally. Colin holds a Bachelor of Engineering From Milwaukee University.

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