The Euro continues its recovery from last week’s Friday drop as President Trump and President Xi agree on a truce to ease trade tensions between the US and China until a final agreement is reached. During the past weekend’s G20 summit, Trump agreed to hold off his January plans to increase tariffs on $200 billion worth of Chinese goods, while Xi vowed to purchase substantial amounts of US goods to reduce the trade imbalance between the US and China. Part of the Euro’s drop from 1.21 to the 1.13 level is attributed to investors fearing that the slowdown in the Chinese economy due to tensions with the US will propel harshly into the Eurozone’s economy. For today, investors need to be on the lookout for any news related to the controversial Italian’s budget plan, especially that EU finance ministers are set to meet today.
The Euro slowly approaches the 200-period moving average and the 1.1426 resistance. A break above these two levels will confirm a shift in the directional bias of the pair and cause an upsurge in prices to 1.1494. Investors need to note that the 200-period moving average is a critical point and breaking above won't be easy, hence, there is still a risk of rejection. If prices reject breaking above this level then prices will drop back towards the 1.1315 support.
Support: 1.1315 / 1.1260
Resistance: 1.1426 / 1.1494