There has been volatility in the market over the past trading hours as traders weigh the progress of Sino-US trade war. At the same time, the US equities had a steep drop with the decline of the US Treasury yields and the dollar weakened.
With expectations of further rate cuts, the markets are preparing for further rate cuts in the US. Although, this didn’t come out similarly on its effect in the past few weeks.
Trade war concerns set a rate cut which gives higher risks to the assets while pushing the dollar lower. On the other end, we have the announcement of Trump to impose additional tariff which was taken on a negative light instead of seeing for probable gains on monetary easing.
More or less, safe-haven currencies are the ones experiencing the majority of the volatility after Trump’s recent announcement. The pair has already moved a few steps back and relatively kept the pair on the day.
Analyzing the fundamental aspect, the upcoming speeches from two Fed members will have a big role in determining the Fed’s position that may have to change since the previous meeting. This is in consideration of the steep rise of the futures market with the expectation of further rate cuts at the next meeting. Also, the German factory orders were published earlier today before the 2.5% rise of new purchases in June.
The resistance of the euro major pair converged with the 50- and 100-MA to the area of 1.1230. Furthermore, the 200-MA keeps the pair on shorter time frames as seen on the 4-hour chart.
Gains earlier this day are countered, although, it might be too early to say for a daily close. If the EUR/USD pair closes around the present levels, it could result in a reversal candle on the daily chart.
The horizontal level of 1.1188, which has restricted the pair for an earlier decline. Also, this is the initial support level. Let us take note of the bearish engulfing candle on the 4-hour chart that keeps the pressure for the pair prior to the North American hours.
The euro major pair has met some resistance from the Moving Averages on the daily and 4-hour chart. Before the sellers came in the picture, the pair has been performing quite well, but then, it also opens purchases on the decline. A bearish engulfing candle based on the 4-hour chart.