Macro Analysis + TA, Reversal in EURUSD

MACRO ANALYSIS:

The dollar rallied to a three-week high on Friday, getting some safe-haven bids, as risk appetite for higher-yielding currencies waned with renewed uncertainty about the rollback of existing tariffs, a major component of a preliminary U.S.-China trade deal.

“What really has been driving the market is this underlying uncertainty over whether or not we will get that rollback,” said Brian Daingerfield, head of G10 FX strategy, at Natwest Markets in Stamford, Connecticut.

Overall, though, sentiment is likely to remain supportive for risky assets, as efforts are being made to do a trade deal, which would remove a huge risk to the global economic outlook.

We expect a continuation of pressure on EUR and strengthening of USD in the short term (1-5 days). But as times goes by - it is clear that a White House and Trump is interested in Trade Deal, as Officials from both countries on Thursday said: China and the United States had agreed to roll back tariffs already put in place on each others’ goods in a “phase one” deal, but the idea has been met with stiff opposition within some quarters of the Trump administration.

TECHNICAL ANALYSIS:

From TA point of view - we can see that EURUSD pair completed 5 waves up and currently progressing through correctional waves ABC. As we expect a short term strength in USD - we believe that EURUSD will go to 61.8 Fib Lvl - where we can expect a reversal in the price action and the start of a new 5 waves up.

Additionally, we can observe a divergence between Price Action and RSI indicator - which is the sign that reversal is coming in the near future.

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