- S dollar’s safe haven status allows it to recover some losses against the Euro.
- China-US trade war continues to escalate, fueling more investor caution.
- President Trump accuses China of trying to sabotage his re-election plans.
The EUR/USD kicked off Thursday’s trading session on a weak bearish trend likely due to investors taking a more cautious stand courtesy of the ongoing U.S-China trade war. The latter is the major reason for the cautious outlook among investors on Thursday morning, as well as weak economic indicators. Investors sided with the dollar following the U.S President Donald Trump’s decision to lash out on China through Twitter. Trump accused the Asian country’s government of running a disinformation campaign aimed at lowering his chances of winning a second term in office.
The EUR/USD should target the $1.1005, $1.1032, and $1.1061 price levels if it goes long above $1.0985. it should also test the $1.0925, $1.0916, $1.0898, and $1.0864 levels if it goes short below $1.0945. However, the current performance is weak bearish and might continue as the trade war lends some gains to the dollar due to its safe-haven status.
The Euro rallied in the previous trading session after Germany and France proposed a COVID-19 recovery fund. Riskier assets rallied against the dollar on Wednesday due to the positive sentiments caused by news of positive findings form a developmental vaccine. The dollar’s gains on Thursday indicate that the momentum in riskier assets is easing off.
Thursday is a bank holiday in Germany and France, which means that the U.S dollar may get a chance to rally against the Euro. Additionally, there will be some data releases on the same day, which might weaken the Euro. The releases include the German and French manufacturing PMIs, as well as flash manufacturing PMI and flash services PMI data. The data is expected to show unfavorable performance and thus weigh down on the Euro, potentially giving the dollar a chance for some more gains.